~~This letter accompanies~~You are cordially invited to attend the ~~Proxy Statement for our Annual Meeting~~2014 annual meeting of ~~Holders~~stockholders (the “Annual Meeting”) of ~~Common Stock~~William Lyon Homes, a Delaware corporation, to be held ~~at 4:~~on Tuesday, May 27, 2014, 10:00 ~~p.m.~~a.m. local time, ~~on Wednesday, November 9, 2005,~~ at ~~The Balboa Bay Club & Resort, 1221 West Coast Highway,~~the Fairmont Hotel, 4500 MacArthur Boulevard, Newport Beach, California ~~92663. We hope that it will be possible for you to attend in person.~~

~~In addition, we will present a report on our operations and activities for the past year.~~ Following the ~~meeting, management will be pleased to answer your questions about the Company.~~

The Notice of Annual Meeting and Proxy Statement accompanying this letter describe the matters upon which you will vote at the upcoming Annual Meeting and we urge you to read these materials, as well as the accompanying 2004 Annual Report on Form 10-K, as amended, carefully. Your vote is very important, regardless of how many shares you own. We hope you can attend the Annual Meeting in person. However, whether or not you plan to attend the Annual Meeting,~~please complete, sign, date and return the Proxy Card in the enclosed envelope~~~~. If you attend the Annual Meeting, you may vote in person if you wish, even though you have previously returned your proxy.~~

NOTICE IS HEREBY GIVEN that the Annual Meeting of Holders of Common Stock of William Lyon Homes, a Delaware corporation, will be held at 4:00 p.m. local time, on Wednesday, November 9, 2005, at The Balboa Bay Club & Resort, 1221 West Coast Highway, Newport Beach, California 92663, for the following purposes:

~~Only stockholders of record of the Common Stock of William Lyon Homes at the close of business on Friday, September 30, 2005 (the “Record Date”) are entitled to notice of and to vote~~ at the Annual Meeting, ~~or any adjournments or postponements thereof. A list of such stockholders entitled to vote~~we will ~~be available for inspection by any stockholder at the Annual Meeting or for 10 days prior to the Annual Meeting at~~discuss our ~~principal executive offices located at 4490 Von Karman Avenue, Newport Beach, California 92660.~~2013 fiscal year results.

To assure that your shares will be represented at the Annual Meeting, you are requested to complete, date and sign the attached proxy card and return it promptly in the postage paid, addressed envelope provided, whetherWhether or not you plan to attend the Annual Meeting in ~~person. No additional postage~~person, and regardless of the number of shares of William Lyon Homes stock you own, it is ~~required if mailed in~~important that your shares are represented and voted at the ~~United States. If you attend the meeting, you~~Annual Meeting. You may vote ~~in person even though~~on the Internet, or if you ~~have sent in your~~are receiving a paper copy of the proxy statement, by telephone or by completing and mailing a proxy card. ~~Your~~Voting over the Internet, by telephone or by written proxy ~~can be withdrawn by~~will ensure your shares are represented at the Annual Meeting.

On behalf of the Board of Directors of William Lyon Homes, we thank you ~~at any time before it is voted.~~for your participation.

~~PROXY STATEMENT~~4695 MacArthur Court, 8^th Floor, Newport Beach, California 92660

~~This Proxy Statement is being furnished to the~~The 2014 annual meeting of stockholders (the “Annual Meeting”) of William Lyon Homes, a Delaware corporation ~~(“William Lyon Homes” or the~~(the “Company”), ~~in connection with~~will be held on Tuesday, May 27, 2014, 10:00 a.m. local time, at the ~~solicitation~~Fairmont Hotel, 4500 MacArthur Boulevard, Newport Beach, California 92660. We will consider and act on the following items of ~~the accompanying proxy by the Board of Directors for use~~business at the Annual Meeting of Holders of Common Stock to be held at 4:00 p.m. local time, on Wednesday, November 9, 2005, at The Balboa Bay Club & Resort, 1221 West Coast Highway, Newport Beach, California 92663, and at any adjournments or postponements thereof. At the Annual Meeting, Holders of William Lyon Homes common stock (“Common Stock”) will be asked to vote upon:Meeting:

~~This Proxy Statement and the accompanying Proxy Card are first being mailed to the Company’s stockholders on or about October 25, 2005.~~

The cost of the solicitation of proxies will be paid by the Company. In addition to solicitation of proxies by use of the mails, directors, officers and employees may solicit proxies personally, or by other appropriate means. Following the original mailing of the proxies and other soliciting materials, the Company will request that brokers, custodians, nominees and other record holders forward copies of the proxy and other soliciting materials to persons for whom they hold shares of Common Stock and request authority for the exercise of proxies. In such cases, the Company will reimburse them for their reasonable expenses in doing so. The Company has retained the services of Proxy Express, Inc. to assist in the distribution and solicitation of proxies. The Company estimates the costs for such services will not exceed $5,500.

Only holders of record of ~~Common Stock~~the Company’s Class A common stock and Class B common stock at the close of business on ~~Friday, September 30, 2005 (the “Record Date”) will be~~April 4, 2014 are entitled to notice of, to attend, and to vote at the Annual Meeting. AsA list of stockholders eligible to vote at the Annual Meeting will be available for inspection, for any purpose germane to the Annual Meeting, at the principal executive office of the Company during regular business hours for a period of no less than ten days prior to the Annual Meeting.

The Company is pleased to take advantage of the Securities and Exchange Commission rules that allow companies to furnish proxy materials to their stockholders on the Internet. This process allows the Company to provide its stockholders with Annual Meeting information in a timely manner, while reducing the environmental impact and lowering the costs of printing and distributing our proxy materials.

You are cordially invited to attend the Annual Meeting in person. To ensure that your vote is counted at the Annual Meeting, however, please vote as promptly as possible. The Fairmont Hotel is accessible to those who require special assistance. If you require special assistance, please call the hotel at (949) 476-2001.

Your proxy is solicited on behalf of the Board of Directors (the “Board”) of William Lyon Homes, a Delaware corporation (as used herein, the “Company,” “we,” “us” or “our”), for use at our 2014 annual meeting of stockholders (the “Annual Meeting”) to be held on Tuesday, May 27, 2014, 10:00 a.m. local time, at the Fairmont Hotel, 4500 MacArthur Boulevard, Newport Beach, California 92660, or at any continuation, postponement or adjournment thereof, for the purposes discussed in this proxy statement and in the accompanying Notice of Annual Meeting and any business properly brought before the Annual Meeting. Proxies are solicited to give all stockholders of record an opportunity to vote on matters properly presented at the Annual Meeting. Directions to attend the Annual Meeting may be found on our website atwww.lyonhomes.com. References to our website in this Proxy Statement are not intended to function as hyperlinks and the information contained on our website is not incorporated into this Proxy Statement. This is our first meeting of stockholders since our initial public offering became effective in May 2013.

We have elected to provide access to our proxy materials over the Internet. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials (the “Notice”) to most of our stockholders of record, and paper copies of the proxy materials to certain other stockholders of record. Brokers and other nominees who hold shares on behalf of beneficial owners will be sending their own similar Notice. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to request a printed copy by mail or electronically may be found on the Notice and on the website referred to in the Notice, including an option to request paper copies on an ongoing basis. On April 15, 2014, we intend to make this proxy statement available on the Internet and to commence mailing of the Notice to all stockholders entitled to vote at the Annual Meeting. We intend to mail this proxy statement, together with a proxy card, to those stockholders entitled to vote at the Annual Meeting who have properly requested paper copies of such materials, within three business days of such request.

Our proxy statement and 2013 Annual Report are available atwww.proxyvote.com. This website address contains the following documents: the Notice of the Annual Meeting, the proxy statement and proxy card sample, and the 2013 Annual Report. You are encouraged to access and review all of the important information contained in the proxy materials before voting.

Record holders of our Class A common stock and our Class B common stock as of the close of business on ~~Friday, September 30, 2005, there were 8,652,067 shares of Common Stock outstanding and~~April 4, 2014, the record date for the Annual Meeting, are entitled to vote ~~held of record by approximately 2,524 stockholders. A majority~~at the Annual Meeting on all matters to be voted upon. As of the record date, there were 28,012,415 shares ~~issued and~~of our Class A common stock outstanding, ~~and entitled to vote, present in person or represented by proxy, will constitute a quorum for the transaction~~including an aggregate of ~~business. Each holder~~603,834 unvested shares of ~~Common Stock is~~restricted stock, each entitled to one vote, ~~for~~and there were 3,813,884 shares of our Class B common stock outstanding, each ~~share~~entitled to five votes. There were approximately eight holders of ~~Common Stock held~~record of our Class A common stock, and one holder of record of our Class B common stock, as of the Record Date. A list of such stockholders entitled to vote will be available for inspection by any stockholder at the Annual Meeting, or for 10 days prior to the Annual Meeting, at the Company’s principal executive offices located at 4490 Von Karman Avenue, Newport Beach, California 92660.record date.

You are requested to complete, date, sign and return the accompanying Proxy Card in the enclosed envelope. All properly executed, returned and unrevoked proxies will be voted in accordance with the instructions indicated thereon.Executed but unmarked proxies will be voted for the election of each director nominee listed on the Proxy Card, for approval of the 2005 Senior Executive Bonus Plan and for ratification of the Audit Committee’s selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2005. The William Lyon Homes Board of Directors does not presently intend to bring any business before the Annual Meeting other than that referred to in this Proxy Statement and specified in the Notice of the Annual Meeting. As to any business that may properly come before the Annual Meeting, including any motion made for adjournment or postponement of the Annual Meeting (including for purposes of soliciting additional votes for election of directors), the proxies will be voted at the Board’s discretion. Any William Lyon Homes stockholder who has given a proxy may revoke it at any time before it is exercised at the Annual Meetingvote by (i) filing a written revocation with, or delivering a duly executed proxy bearing a later date to, the Vice President and Corporate Secretary of William Lyon Homes, 4490 Von Karman Avenue, Newport Beach, California 92660, or (ii) attending the Annual Meeting and voting in person ~~(although~~or you may vote by submitting a proxy. The method of voting by proxy differs (1) depending on whether you are viewing this proxy statement on the Internet or receiving a paper copy and (2) for shares held as a record holder and shares held in “street name.” If you hold your shares of common stock as a record holder and you are viewing this proxy statement on the Internet, you may vote by submitting a proxy over the Internet by following the instructions on the website referred to in the Notice previously mailed to you. If you hold your shares of common stock as a record holder

and you are reviewing a paper copy of this proxy statement, you may vote your shares by completing, dating and signing the proxy card that was included with the proxy statement and promptly returning it in the preaddressed, postage paid envelope provided to you, or by submitting a proxy over the Internet or by telephone by following the instructions on the proxy card. If you hold your shares of common stock in street name, which means your shares are held of record by a broker, bank or nominee, you will receive a Notice from your broker, bank or other nominee that includes instructions on how to vote your shares. Your broker, bank or nominee will allow you to deliver your voting instructions over the Internet and may also permit you to vote by telephone. In addition, you may request paper copies of the proxy statement and proxy card from your broker by following the instructions on the Notice provided by your broker.

The Internet and telephone voting facilities will close at 11:59 p.m. EDT on May 26, 2014. If you vote through the Internet, you should be aware that you may incur costs to access the Internet, such as usage charges from telephone companies or Internet service providers and that these costs must be borne by you. If you vote by Internet or telephone, then you need not return a written proxy card by mail.

YOUR VOTE IS VERY IMPORTANT. You should submit your proxy even if you plan to attend the Annual Meeting. If you properly give your proxy and submit it to us in time to vote, one of the individuals named as your proxy will vote your shares as you have directed.

All shares entitled to vote and represented by properly submitted proxies (including those submitted electronically, telephonically and in writing) received before the polls are closed at the Annual Meeting, and not revoked or superseded, will be voted at the Annual Meeting in accordance with the instructions indicated on those proxies. If no direction is indicated on a proxy, your shares will be voted as follows: FOR each of the eight (8) nominees for director named in the proxy statement, FOR the ratification of the selection of KPMG LLP as our independent registered public accounting firm, FOR the advisory say-on-pay vote and FOR every 1 YEAR on the frequency of future say-on-pay votes. The proxy gives each of Matthew R. Zaist and Colin T. Severn discretionary authority to vote your shares in accordance with his best judgment with respect to all additional matters that might come before the Annual Meeting.

If you are a stockholder of record, you may revoke your proxy at any time before your proxy is voted at the Annual Meeting by taking any of the following actions:

Written notices of revocation and other communications with respect to the revocation of Company proxies should be addressed to:

If your shares are held in “street name,” you may change your vote by submitting new voting instructions to your broker, bank or other nominee. You must contact your broker, bank or other nominee to find out how to do so. See below regarding how to vote in person if your shares are held in street name.

If you plan to attend the Annual Meeting and wish to vote in person, you will be given a ballot at the Annual Meeting. Please note, however, that if your shares are held in “street name,” which means your shares are held of record by a ~~plurality~~broker, bank or other nominee, and you wish to vote at the Annual Meeting, you must bring to the Annual Meeting a legal proxy from the record holder of the ~~votes cast~~shares, which is ~~required~~the broker or other nominee, authorizing you to elect any nominee for director. The approval of the 2005 Senior Executive Bonus Plan and the ratification of the Audit Committee’s selection of Ernst & Young LLP as the Company’s independent registered public accounting firm requires approval by a majority of the votes castvote at the Annual Meeting.

Stockholders who wish to attend the Annual Meeting will be required to present verification of ownership of our common stock, such as a bank or brokerage firm account statement, and will be required to present a valid government-issued picture identification, such as a driver’s license or passport, to gain admittance to the Annual Meeting. No cameras, recording equipment, electronic devices, large bags, briefcases or packages will be permitted in the Annual Meeting.

~~If an executed~~The inspector of elections appointed for the Annual Meeting will tabulate votes cast by proxy or in person at the Annual Meeting. The inspector of elections will also determine whether a quorum is ~~returned and you have specifically abstained~~present. In order to constitute a quorum for the conduct of business at the Annual Meeting, a majority in voting power of all of the shares of the stock entitled to vote at the Annual Meeting must be present in person or represented by proxy at the Annual Meeting. Shares that abstain from voting on any ~~matter, the shares~~proposal, or that are represented by ~~such proxy~~broker non-votes (as discussed below), will be ~~considered~~treated as shares that are present and entitled to vote at the Annual Meeting for purposes of determining whether a quorum ~~and~~is present.

Brokers or other nominees who hold shares of common stock in “street name” for ~~purposes~~a beneficial owner of ~~calculating~~those shares typically have the vote, but will not be considered to have been cast with respect to such matter. Also, if an executed proxy is returned by a broker holding shares in street name that indicates that the broker does not have discretionary authority ~~as to certain shares~~ to vote in their discretion on ~~one or more matters, such shares will be considered present at the meeting for purposes of determining a quorum, but will~~“routine” proposals when they have not ~~be considered~~received instructions from beneficial owners. However, brokers are not allowed to ~~have been cast with respect to such matter. Thus,~~exercise their voting discretion with respect to the election of directors or for the approval of matters which the ~~2005 Senior Executive Bonus Plan~~New York Stock Exchange (the “NYSE”) determines to be “non-routine,” without specific instructions from the beneficial owner. These non-voted shares are referred to as “broker non-votes.” If your broker holds your common stock in “street name,” your broker will vote your shares on “non-routine” proposals only if you provide instructions on how to vote by filling out the voter instruction form sent to you by your broker with this proxy statement. Only Proposal No. 2 (ratifying the appointment of our independent registered public accounting firm) is considered a routine matter. Proposal Nos. 1 (election of directors), 3 (say-on-pay vote) and 4 (frequency vote) are not considered routine matters, and without your instruction, your broker cannot vote your shares. In addition, pursuant to our bylaws, abstentions will not be counted as a vote case “for” or “against” any proposal.

Proposal No. 1: Election of Directors. A plurality of the votes cast by the holders of shares entitled to vote in the election of directors at the Annual Meeting is required for the election of directors. Accordingly, the eight (8) director nominees receiving the highest number of votes will be elected. Abstentions and broker non-votes are not treated as votes cast and, therefore, will not have any effect on the outcome of the election of directors.

Proposal No. 2: Ratification of Independent Registered Public Accounting Firm. The affirmative vote of the holders of a majority of the votes cast and entitled to vote at the Annual Meeting is required for the ratification of the ~~Audit Committee’s~~ selection of ~~Ernst & Young~~KPMG LLP as our independent registered public accounting firm. Abstentions will not be counted either for or against this proposal. Brokers generally have discretionary authority to vote on the ~~Company’s~~ratification of our independent registered public accounting firm, ~~abstentions~~thus broker non-votes are generally not expected to result from the vote on Proposal No. 2.

Proposal No. 3: Advisory Say-on-Pay Vote. The affirmative vote of the holders of a majority of the votes cast and entitled to vote at the Annual Meeting is required for approval, on an advisory basis, of the compensation of our named executive officers as disclosed in the proxy statement. Abstentions will not be counted either for or against this proposal. The approval of Proposal No. 3 is a non-routine proposal on which a broker or other nominee does not have discretion to vote any uninstructed shares. Broker non-votes represent votes not entitled to be cast on the matter and thus will have no effect on the outcome of the say-on-pay vote. ~~In addition, in~~

Proposal No. 4: Advisory Vote on Frequency of Future Stockholder Advisory Votes on Executive Compensation. The proposal regarding the ~~election of directors, a stockholder may withhold such stockholder’s vote. Withheld votes will be excluded from the~~advisory vote ~~and will have no effect~~ on the ~~outcome~~frequency of ~~such election.~~

Atfuture say-on-pay votes also requires the affirmative vote of the holders of a majority of the votes cast and entitled to vote at the Annual Meeting ~~you~~on such proposal. Abstentions will not be ~~asked to vote on~~counted either for or against this proposal. If none of the ~~election~~frequency alternatives (one year, two years or three years) receive a majority of ~~eight directors who~~the votes cast, we will ~~constitute the Board of Directors of William Lyon Homes. The eight nominees receiving~~consider the highest number of votes cast by stockholders to be the frequency that has been selected by our stockholders. Consistent with current Securities Exchange Act of 1934, as amended (“Exchange Act”) rules, our proxies will have discretionary authority to vote in accordance with the Board’s recommendation for proxy cards that are returned with no selection made relating to this proposal. Because the advisory vote on the frequency of future say-on-pay votes is advisory and not binding on the Company or the Board in any way (as is also the case for the say-on-pay vote and the ratification of the selection of KPMG LLP), the Board may decide that it is in the best interest of the Company and its stockholders to hold an advisory vote on future say-on-pay votes more or less frequently than the option approved by our stockholders.

Our Board is soliciting proxies for the Annual Meeting from ~~holders~~our stockholders. We will bear the entire cost of soliciting proxies from our stockholders. In addition to the solicitation of proxies by delivery of the Notice or proxy statement by mail, we will request that brokers, banks and other nominees that hold shares of ~~Common Stock represented~~our common stock, which are beneficially owned by our stockholders, send Notices, proxies and proxy materials to those beneficial owners and secure those beneficial owners’ voting instructions. We will reimburse those record holders for their reasonable expenses. We do not intend to hire a proxy solicitor to assist in the solicitation of proxies. We may use several of our regular employees, who will not be specially compensated, to solicit proxies from our stockholders, either personally or by telephone, Internet, facsimile or special delivery letter.

A list of stockholders eligible to vote at the Annual Meeting will be ~~elected~~available for inspection, for any purpose germane to the Annual Meeting, at the principal executive office of the Company during regular business hours for a period of no less than ten days prior to the Annual Meeting.

This proxy statement contains “forward-looking statements” (as defined in the Private Securities Litigation Reform Act of 1995). These statements are based on our current expectations and involve risks and uncertainties, which may cause results to differ materially from those set forth in the statements. The forward-looking statements may include statements regarding actions to be taken by us. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Forward-looking statements should be evaluated together with the many uncertainties that affect our business, particularly those mentioned in the risk factors in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2013 and in our periodic reports on Form 10-Q and our current reports on Form 8-K.

Pursuant to the Company’s Third Amended and Restated Certificate of ~~Directors.~~Incorporation (the “Certificate of Incorporation”), and the Company’s Amended and Restated Bylaws (the “bylaws”), the total number of directors constituting the Board shall be fixed exclusively by the Board. Listed below are the Company’s eight current directors. Based upon the recommendation of our Nominating and Corporate Governance Committee (the “Nominating Committee”), the Board has resolved that the number of directors constituting the entire Board remain at eight, and has nominated each of the Company’s current directors set forth below for re-election at the Annual Meeting. Each director so elected at the Annual Meeting will ~~hold office~~serve a one-year term until the Company’s next ~~Annual Meeting~~annual meeting and until his or her successor is duly elected and ~~qualified.~~

~~Each proxy received will~~qualified or until his or her earlier death, resignation or removal. At the Annual Meeting, proxies cannot be voted for a greater number of individuals than the ~~election~~eight nominees named in this proxy statement.

The Board and the Nominating Committee believe the skills, qualities, attributes and experience of the ~~persons named below, unless~~directors provide the ~~stockholder signing such proxy withholds authority~~Company with business acumen and a diverse range of perspectives to ~~vote for one or more of these nominees in~~engage each other and management to address effectively the ~~manner described on~~Company’s evolving needs and represent the proxy card. Although it is not contemplated that any nominee named below will decline or be unable to serve as a director, in the event any nominee declines or is unable to serve as a director, the proxies will be voted by the proxy holders as directed by the Board of Directors. Eachbest interests of the ~~nominees named below is currently a director of the Company.~~

Except as described below, there are no family relationships between any director, nominee or executive officer and any other director, nominee or executive officer of William Lyon Homes. Except as described below, there are no arrangements or understandings between any director, nominee or executive officer and any other person pursuant to which he has been or will be selected as a director and/or executive officer of William Lyon Homes. See “Information Regarding the Directors of William Lyon Homes” on page 4. Except as may be described below, there are no material proceedings to which any of the following is a party adverse to the Company or any of its subsidiaries, or has a material interest adverse to the Company or any of its subsidiaries: any director, nominee, officer or affiliate of the Company, any owner of record or beneficially of more than five percent (5%) of the outstanding shares of Common Stock, or any associate of any such director, nominee, officer, affiliate of the Company, or security holder.Company’s stockholders.

~~The Board of Directors recommends a vote “For” the election of all of the nominees listed above.~~

The Company has had a long-standing commitment to sound corporate governance policies and practices. In an effort to improve such policies and practices, the Company’s Board and management have reviewed suggestions by various authorities in corporate governance, the practices of other public companies, the provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), various new and proposed rules of the Securities and Exchange Commission (the “SEC”), and the new listing standards of the New York Stock Exchange (“NYSE”).

As a result of these reviews, the Board has adopted Corporate Governance Guidelines (the “Corporate Governance Guidelines”), which provide a framework for the Board’s operations and establish a set of common expectations and principles as to how the Board should perform its functions. The Corporate Governance Guidelines provide, among other things, that a majority of the full Board and all members of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee must be independent.

The Board has also adopted a Code of Business Conduct and Ethics (the “Code of Ethics”) that is applicable to all directors, employees, and officers of the Company. The Code of Ethics constitutes the Company’s “code of ethics” within the meaning of Section 406 of the Sarbanes-Oxley Act and the Company’s “code of business conduct and ethics” within the meaning of the listing standards of the NYSE. The Company intends to disclose future amendments to certain provisions of the Code of Ethics, or waivers of such provisions applicable to the Company’s directors and executive officers, on the Company’s website at www.lyonhomes.com.

The Corporate Governance Guidelines and the Code of Ethics are available on the Company’s website at www.lyonhomes.com. In addition, printed copies of the Corporate Governance Guidelines and the Code of Ethics are available upon written request to Investor Relations, William Lyon Homes, 4490 Von Karman Avenue, Newport Beach, California 92660.

The following table lists the persons nominated by the Board of Directors for election as directors of the Company and provides their respective ages and current positions with the Company as of October 17, 2005. Biographical information for each nominee is provided below.

4THE BOARD RECOMMENDS A VOTE “FOR” EACH OF THE EIGHT NAMED DIRECTOR NOMINEES.

Vacancies on the Board, including any vacancy created by an increase in the size of the Board, may be filled only by a majority of the directors remaining in office, even though less than a quorum of the Board, or a sole remaining director, and not by stockholders. A director elected by the Board to fill a vacancy will serve until the next annual meeting of stockholders and until such director’s successor is elected and qualified, or until such director’s earlier retirement, resignation, disqualification, removal or death.

If any nominee should become unavailable for election prior to the Annual Meeting, an event that currently is not anticipated by the Board, the proxies will be voted in favor of the election of a substitute nominee or nominees proposed by the Board or the number of directors may be reduced accordingly. Each nominee has agreed to serve if elected and the Board has no reason to believe that any nominee will be unable to serve.

Set forth below is biographical information for each nominee and a summary of the specific qualifications, attributes, skills and experiences which led the Board to conclude that each nominee should serve on the Board at

G~~ENERAL~~ W~~ILLIAM~~ L~~YON~~this time. There are no family relationships between any director or executive officer and any other director or executive officer of the Company, except for General William Lyon and William H. Lyon, who are father and son.

General William Lyon was elected director and Chairman of the Board of ~~the former~~ The Presley Companies, the predecessor of the Company, in 1987 and has served ~~the Company~~ in that capacity in addition to his role as Chief Executive Officer of the Company since November 1999. General Lyon ~~is the Company’s Chief Executive Officer. General Lyon~~ also ~~serves~~served as the Chairman of the Board, President and Chief Executive Officer of the former William Lyon Homes, which sold substantially all of its assets to the Company in 1999 and subsequently changed its name to Corporate Enterprises, Inc. In his current role as Executive Chairman, General Lyon works with the top executives of the Company to set the leadership and strategic direction for the organization. In recognition of his distinguished career in real estate development, General Lyon was elected to the California Building Industry Foundation Hall of Fame in 1985. General Lyon is a retired USAF Major General and was Chief of the Air Force Reserve from 1975 to 1979. General Lyon is a director of ~~Fidelity Financial Services, Inc.~~Woodside Credit LLC, and iswas the founding Chairman of the Board of Directors of Commercial Bank of ~~California.~~

W~~ADE~~ ~~H. CABLE~~ ~~served~~California from ~~1985~~2003 to ~~1999~~2013, and continues to serve as a ~~director and President and Chief Executive Officer of the former The Presley Companies and~~board member. Since 2005, General Lyon has served as a director and President and Chief Operating Officer of the Company since November 1999. Prior to joining The Presley Companies, he worked for thirteen years with Pacific Enterprises as a senior executive in various of its real estate operations, including two years as an Executive Vice President of Pacific Lighting Real Estate Group and four years as the President of Fredricks Development Company, a residential developer and homebuilder.

R~~ICHARD~~ ~~E. FRANKEL~~ ~~has been associated with homebuilding entities for over 25 years, and joined the board of directors~~ on January 25, 2000. From 1977 to 1997, he held key positions including Chief Financial Officer, Investment Division Manager, Vice Chairman and President of the former William Lyon Homes. He currently serves as Chairman and Chief Executive Officer of William Lyon Financial Services, a wholly-owned subsidiary of the Company. He is also a director of Commercial Bank of California.

H~~AROLD~~ ~~H. GREENE~~ was appointed to the board of directors on October 17, 2005. Mr. Greene is a 40-year veteran of the commercial and residential real estate lending industry. He most recently served as the Managing Director for Bank of America’s California Commercial Real Estate Division from 1998 to 2001 where he was responsible for lending to commercial real estate developers in California and managed an investment portfolio of approximately $2.6 billion. From 1990 to 1998, Mr. Greene was the Executive Vice President of SeaFirst Bank in Seattle, Washington and prior to that he served as the Vice Chairman of MetroBank from 1989 to 1990 and in various positions, including Senior Vice President in charge of the Asset Based Finance Group, with Union Bank, where he worked for 27 years. Mr. Greene currently serves as a director of Gary’s and Company (men’s clothing retailer) and as a director and member of the audit committee of Paladin Realty Income Properties, Inc. (real estate investments).

G~~ARY~~ ~~H. HUNT~~ was appointed to the board of directors on October 17, 2005. He has more than three decades of experience in government, business, major land use planning and development, as well as governmental and political affairs. Since 2001, Mr. Hunt has been the Managing Partner of California Strategies, LLC, a strategic consulting firm, in Newport Beach, California with offices in Sacramento and Los Angeles. Formerly Executive Vice President and a member of the Board of ~~Directors~~Leaders of USC’s Marshall School of Business. General Lyon has received countless awards and honors for his tremendous and sustained success in the ~~Executive Committee of The Irvine Company, a real estate developer, for which Mr. Hunt worked for 24 years, Mr. Hunt’s career also includes staff~~building industry and ~~appointed positions~~his extensive public service record.

General Lyon provides our Board with ~~the California State Legislature, U.S. House of Representatives, California Governor Ronald Reagan,~~extensive senior leadership and ~~President George W. Bush. He currently serves~~industry and operational experience and therefore is well-suited to serve as our Chairman of the ~~California Bay Delta Authority. He also currently serves~~Board. Through his experience, his knowledge of our operations and the markets in which we compete, and his professional relationships within our industry, General Lyon is exceptionally qualified to identify important matters for Board review and deliberation and is instrumental in assisting the Board in determining our corporate strategy. In addition, by serving as ~~a director of Glenair Inc., a manufacturer of electrical connector accessories, and G-REIT, Inc., a real estate investment trust, and as~~both our Chairman of the Board ~~of Advisors of Kennecott Land Company,~~and Executive Chairman, General Lyon serves as an invaluable bridge between management and the Board and ensures that they act with a ~~real estate land developer in Utah.~~common purpose.

A~~RTHUR~~ ~~B. LAFFER~~ ~~was appointed to the board of directors on October 17, 2005. He is the Founder and has been Chairman and~~William H. Lyon, Chief Executive Officer, of Laffer Associates, an economic research and financial consulting firm, in San Diego, California. Dr. Laffer has also been Chief Executive Officer of Laffer Advisers Inc., a broker-dealer, since 1981, and Chief Executive Officer of Laffer Investments, an investment money management firm, since 1999. Dr. Laffer has been a leader in the nation in providing economic research and global investment-research consulting services to real estate asset managers, pension funds, financial institutions, and top corporations. Commonly known as “The Father of Supply-Side Economics,” Dr. Laffer is a founding member of the U.S. Congressional Policy Advisory Board, served two terms as a member of President Reagan’s

Economic Policy Advisory Board, and helped shape public policy with his involvement in California’s Proposition 13, the groundbreaking California initiative that drastically cut state property taxes in 1978. Dr. Laffer is a member of the board of directors and chairman of the audit and compensation committees of OXiGENE, Inc. (biopharmaceuticals); a member of the board of directors and a member of the audit committee of PETCO Animal Supplies, Inc.; a member of the board of directors of Veolia Environment (environmental management); a member of the board of directors and a member of the audit and compensation committees of MPS Group, Inc. (business services provider); and a member of the board of directors of Provide Commerce, Inc. (operator of e-commerce websites for perishable commodities).

W~~ILLIAM~~ ~~H. LYON, son of Chairman William Lyon,~~ worked full time with the former William Lyon Homes from November 1997 through November 1999 as an assistant project manager, has been employed by the Company since November 1999 and has been a member of ~~the board of directors~~our Board since January 25, 2000. Since joining the Company ~~Mr. Lyon has been employed~~ as an assistant project manager, ~~and project manager and~~Mr. Lyon has ~~participated in a training program designed to expose him to the many facets of real estate development. From February 2003 until February 2005, he~~ served as a Project Manager, the ~~Company’s~~ Director of Corporate ~~Affairs. In~~Development (beginning in 2002), the Director of Corporate Affairs (from February ~~2005, he was appointed~~2003 to February 2005), Vice President and Chief Administrative Officer (from February 2005 to March 2007), and Executive Vice President and Chief Administrative Officer (from March 2007 to March 2009). Mr. Lyon also actively served as the President of William Lyon Financial Services from June 2008 to April 2009. Effective on March 18, 2009, Mr. Lyon was appointed as President and Chief Operating Officer of the Company. In his current role as Chief Executive Officer, Mr. Lyon is responsible for the overall strategic leadership of the Company working closely with the Executive Chairman and executive leaders to establish, implement and direct the long-range goals, strategies, plans and policies of the Company. Mr. Lyon ~~received~~is Chairman of the Company’s Management Development and Risk Management Committee and Vice Chair of the Executive Committee. Mr. Lyon is also a member of the Company’s Land Committee. Mr. Lyon is a member of the Board of Directors of Commercial Bank of California, Pretend City Children’s Museum in Irvine, CA and The Bowers Museum in Santa Ana, CA. Mr. Lyon holds a dual B.S. in Industrial Engineering and Product Design from Stanford ~~University~~University. Mr. Lyon is the son of General William Lyon.

With over 15 years of service with our Company, Mr. Lyon brings to our Board significant executive and real estate development and homebuilding industry experience, as well as an in-depth understanding of the Company’s business model and operations.

Douglas K. Ammerman was appointed to our Board on February 27, 2007. Mr. Ammerman’s business career includes almost three decades of service with KPMG, independent public accountants, until his retirement in ~~1997.~~2002. He was the Managing Partner of the Orange County office and was a National Partner in Charge — Tax.

He is a certified public accountant (inactive). Since 2005, Mr. Ammerman has invested extensively in residential and commercial real estate throughout Southern California since 1987, primarily in Hispanic neighborhoods. Mr. Meruelo currently is the President and Chief Executive Officer of Meruelo Enterprises, Inc., Cantamar Property Management, Inc. and La Pizza Loca, Inc. Mr. Meruelo currently owns and manages over 1,000 residential units and over 20 retail units and has overseen over 15 developments. Mr. Meruelo established La Pizza Loca, a fast food pizza restaurant, in 1986 and which now has over 50 franchised and company owned restaurants serving Latino communities throughout Southern California. Since 1999, Mr. Meruelo has focused his endeavors on the construction industry and, through Meruelo Enterprises, owns a number of established Southern California utility construction contractors including Herman Weissker, Inc., Doty Bros. Equipment Company and Tidwell Excavating. He has beenserved as a member of the ~~board~~Board of ~~directors since May 10, 2004.~~Directors of Fidelity National Financial (a company listed on the New York Stock Exchange), where he also serves as Chairman of the Audit Committee. Mr. ~~Meruelo~~Ammerman is also a member of the Board of Directors of Remy International, Inc. (a company listed on the NASDAQ Stock Market), Stantec Inc. (a company listed on the New York Stock Exchange) and El Pollo Loco, for each of which he also serves as Chairman of the Audit Committee. In addition, during the past five years Mr. Ammerman had served as a member of the Board of Directors of Quiksilver (a company listed on the New York Stock Exchange), where he served as Chairman of the Audit Committee and a member of both the Compensation and Nominating and Corporate Governance committees. Mr. Ammerman has served as a director of The Pacific Club for twelve years and is a past president. He also has served as a director of the UCI Foundation for fourteen years. Mr. Ammerman holds a B.A. in Accounting from California State University, Fullerton, and a master’s degree in Business Taxation from University of Southern California.

With nearly three decades of accounting experience, as well as significant executive and board experience, Mr. Ammerman provides our Board with operational, financial and strategic planning insights. Mr. Ammerman developed his finance and accounting expertise while holding positions such as Managing Partner and National Partner at KPMG. With this experience, Mr. Ammerman possesses the financial acumen requisite to serve as our Audit Committee Financial Expert and provides our Board with valuable insight into finance and accounting related matters.

Michael Barr was appointed to our Board on November 7, 2012 to fill a new Board seat created in connection with the investment of affiliates of Paulson in the Company. Mr. Barr currently serves as Portfolio Manager for the Paulson Real Estate Funds where he is responsible for all aspects of the real estate private equity business. He is also a partner in Paulson, which he joined in 2008.

From 2001 through 2008, Mr. Barr worked within the Lehman Brothers Real Estate Private Equity Group, serving most recently as a Managing Director of the firm and a principal of Lehman Brothers Real Estate Partners. In this capacity, he was responsible for identifying, evaluating and executing transactions throughout the United States and across all asset classes. While at Lehman Brothers, Mr. Barr led the acquisition of over $8 billion in assets. Prior to joining Lehman Brothers, Mr. Barr served as a principal and a member of the Investment Committee of Westbrook Partners, a real estate merchant banking firm founded by Tiger Management Corporation. During his tenure at Westbrook, which spanned three real estate investment funds, Mr. Barr originated and executed a wide range of real estate transactions. He began his career in the Real Estate Investment Banking group at Merrill Lynch & Co., where he participated in numerous financing and advisory assignments for both public and private real estate companies. Mr. Barr holds a B.B.A. from the University of Wisconsin. He currently serves on the board of ~~directors~~Extended Stay Hotels and ~~chairman~~previously was a board member of Gables Residential Trust and Tishman Hotel & Realty.

With his extensive experience managing a wide variety of real estate transactions, Mr. Barr brings to our Board a deep understanding of and valuable expertise in real estate investment and finance.

Gary H. Hunt joined our Board on October 17, 2005 with over 30 years of experience in real estate. He spent 25 years with The Irvine Company, one of the ~~audit committee~~nation’s largest master planning and land development organizations, serving 10 years as its Executive Vice President and member of ~~Commercial Bank~~its Board of ~~California.~~Directors and Executive Committee. Mr. Hunt led the company’s major entitlement, regional infrastructure, planning, legal and strategic government relations, as well as media and community relations activities.

As a founding Partner in 2001 and now the Vice Chairman of California Strategies, LLC, Mr. Hunt serves as a Senior Advisor to the largest master-planned community and real estate developers in the Western United States, including Tejon Ranch, DMB Pacific Ventures, Five Point Communities, Lennar, Kennecott Land Company, Lewis Group of Companies, Newhall Land, Strategic Hotels and Resorts REIT, Inland American

Trust REIT, to name a few. Mr. Hunt also works or has worked with major national financial institutions, including Morgan Stanley, Alvarez & Marsal Capital Group, LLC, and regional banks, to manage projects through the current real estate macro-economic restructuring and re-entitlement period.

Mr. Hunt currently serves on the boards of ~~Nominees~~Glenair Corporation, University of California, Irvine Foundation and is Chairman of CT Realty. He formerly was a member and lead independent director of Grubb & Ellis Corporation and for sixteen months served as interim President and CEO.

Matthew R. Niemann was appointed to our Board on February 25, 2012. Mr. Niemann is a Managing Director and Head of Houlihan Lokey Capital’s Real Estate Investment Banking Group. He is a senior member of Houlihan’s Financial Restructuring business, and first joined the firm in 1999. Before rejoining Houlihan in 2008, Mr. Niemann spent three years with Cerberus Capital and served as senior managing director and chief strategic officer of GMAC ResCap (a Cerberus portfolio company) in charge of strategy for its $5.0 billion portfolio of builder and developer real estate investments. Mr. Niemann has been involved as a principal or advisor in a wide range of M&A, financing, restructuring and real estate transactions throughout his career, and is a frequent speaker and regularly testifies as an expert in these areas. Earlier in his career, Mr. Niemann was with PricewaterhouseCoopers and practiced law for several years in the Corporate, Banking & Real Estate practice of Bryan Cave in St. Louis. Mr. Niemann holds a law and finance degree from St. Louis University. He was a guest lecturer at the Kellogg Graduate School of Management at Northwestern University in Chicago; a member of the Ph.D. Dissertation Committee at Webster University; and has also served on the Board of Directors and Executive Committee (Treasurer) of the Ronald McDonald Houses of Greater St. Louis.

With extensive experience as an attorney, financial advisor and investment principal, Mr. Niemann brings to our Board demonstrated leadership skills and expertise in capital markets, real estate investment and finance.

Nathaniel Redleaf was appointed to our Board on February 25, 2012. Since 2006, he has served as an analyst at Luxor Capital Group, LP, which serves as the investment manager to a number of private investment funds. In his role at the firm, Mr. Redleaf focuses primarily on the homebuilding, commercial real estate, finance and gaming sectors. Mr. Redleaf currently serves as a member of the Board of Directors of Innovate Managed Holdings LLC and Eastland Tire Australia Pty. He holds a degree in Political Economy of Industrial Societies from UC Berkeley.

With his investment practice focusing primarily on the homebuilding and other-related sectors, Mr. Redleaf brings to our Board valuable experience in real estate investment and finance.

Lynn Carlson Schell was appointed to our Board on February 25, 2012. Ms. Carlson Schell currently serves as the Managing Principal and Chief Executive Officer of Shelter Corporation and The Waters Senior Living, directing the firm’s strategic planning and long-term growth. Since founding Shelter Corporation in 1993, Ms. Carlson Schell has developed or acquired multi-family and senior housing consisting of over 15,000 units and comprising $800 million of real estate. Ms. Carlson Schell’s core accomplishments include her leadership role in driving Shelter Corporation’s development of affordable housing and spearheading its successful diversification into senior living communities with the 1998 formation of The Waters Senior Living. In 2009, Ms. Carlson Schell was honored as an Industry Leader by the Minneapolis/St. Paul Business Journal. Prior to founding Shelter Corporation, Ms. Carlson Schell spent nine years working as an associate and senior developer with Can-American Corporation. She was responsible for residential, condominium and apartment developments in the Midwest and Florida. Ms. Carlson Schell currently serves as the chair of the Board of Directors at the Friends of the Hennepin County Library Foundation and previously served as the Treasurer of the Twin Cities Chapter of the Young Presidents’ Organization. She also serves on the Board of Directors of the Walker Art Center.

With over thirty years of real estate and executive experience, as well as significant board experience, Ms. Carlson Schell provides our Board with operational, financial and strategic planning insights.

The following sets forth information regarding the ~~policy~~current executive officers of the Company. Biographical information pertaining to General William Lyon and William H. Lyon, each of whom is both a director and an executive officer of the Company, may be found in the section above entitled “Information About Director Nominees.”

Matthew R. Zaist, President and Chief Operating Officer, joined the Company in 2000 as the Company’s Chief Information Officer. Since joining the Company, Mr. Zaist has served in a number of corporate operational roles, including Executive Vice President from January 2010 to March 2013 and previously, Corporate Vice President — Business Development & Operations from April 2009 to January 2010. Prior to that, Mr. Zaist served as Project Manager and Director of Land Acquisition for the Company’s Southern California Region. In his current role, Mr. Zaist is responsible for the overall management of the Company’s operations and is a member of the Company’s Executive Committee, Chairman of the Company’s Land Committee and Vice Chairman of the Company’s Management Development and Risk Management Committee. In his most recent role as Executive Vice President, Mr. Zaist oversaw and managed the Company’s restructuring efforts and successful recapitalization. Mr. Zaist is a member of the Executive Committee for the University of Southern California’s Lusk Center for Real Estate. Prior to joining William Lyon Homes, Mr. Zaist was a principal with American Management Systems (now CGI) in their State & Local Government practice. Mr. Zaist holds a B.S. from Rensselaer Polytechnic Institute in Troy, New York.

Colin T. Severn, Vice President and Chief Financial Officer, joined the Company in December 2003, and served in the role of Financial Controller until April 3, 2009. From April 3, 2009, Mr. Severn served as Vice President, Corporate Controller and Corporate Secretary until his promotion to Chief Financial Officer by approval of our Board on August 11, 2009. Mr. Severn continued to serve as the Company’s Corporate Secretary until November 2013. Mr. Severn oversees the Company’s accounting and finance, treasury, and investor relations functions. Mr. Severn is a member of the Company’s Land Committee. Mr. Severn is a CPA (inactive) and has more than 16 years of experience in real estate accounting and finance, including positions with an international accounting firm, and other real estate and homebuilding companies. Mr. Severn holds a B.A. in Business Administration with concentrations in Accounting and Finance from California State University, Fullerton.

Richard S. Robinson, Senior Vice President of Finance and Acquisition, has held this title and served in this capacity since joining the Company in 1999 when it acquired substantially all of the assets of the former William Lyon Homes, where Mr. Robinson had served since May 1997 as Senior Vice President, and as Vice President — Treasurer and other administrative positions at The William Lyon Company or one of its subsidiaries or affiliates since he was hired in June 1979. His experience in residential real estate development and homebuilding finance totals more than 30 years.

Our Board has adopted corporate governance guidelines covering, among other things, the duties and responsibilities of and independence standards applicable to our directors and Board committee structures and responsibilities. These guidelines are available on the corporate governance section of our website athttp://lyonhomes.com/investors/governance. In addition, a printed copy of the guidelines is available free of charge to any stockholder who requests a copy by sending a written request to: Corporate Secretary, William Lyon Homes, 4695 MacArthur Court, 8^th Floor, Newport Beach, California 92660.

Our Board consists of eight directors, seven of whom were initially appointed pursuant to the Company’s prepackaged joint plan of reorganization in February 2012 (the “Plan”) and one of whom was initially appointed to fill a newly created Board seat in connection with a privately negotiated stock issuance that took place in October 2012 (the “Paulson Subscription Agreement”), and each of whom was subsequently duly elected by the stockholders of the Company at the 2013 annual meeting held on April 29, 2013. The current directors are each nominated for re-election at the Annual Meeting as described above, and will hold office until the Annual Meeting and until his or her successor is duly elected and qualified, or until his or her earlier resignation or removal. On May 15, 2013, certain funds and accounts managed by Luxor Capital Group, LP (the “Luxor Investor”), WLH Recovery Acquisition LLC (the “Paulson Investor”), and Lyon Shareholder 2012, LLC (“Lyon LLC”), entered into a stockholders agreement pursuant to which the Luxor Investor, Paulson Investor and Lyon LLC agreed to vote their voting shares at any annual or special meeting of the Company’s stockholders to elect one (1) person proposed by the Paulson Investor, three (3) people proposed by the Luxor Investor, and two (2) people proposed by Lyon LLC, to serve on our Board, in each case subject to certain sunset provisions based on then current ownership levels of such investors and subject to other terms and conditions as set forth in the ~~Corporate Governance Guidelines,~~agreement. We refer to ~~recommend~~such agreement herein as the “Stockholders Agreement,” and ~~encourage~~the Company is not party to the Stockholders Agreement. As of April 4, 2014, the Luxor Investor, Paulson Investor and Lyon LLC collectively control approximately 71% of the total voting power of the Company’s outstanding capital stock, assuming exercise in full of the outstanding warrant to purchase additional shares of Class B Common Stock held by Lyon LLC, and the Stockholders Agreement applies to the election of up to five (5) seats on our Board, based on the ownership levels as of such date. Other than as provided for in the Plan, the Paulson Subscription Agreement or the Stockholders Agreement, we are not aware of any understandings between the directors or any other persons pursuant to which such individuals were elected as directors or are to be selected as a director or nominee in the future.

Pursuant to the Certificate of Incorporation and the bylaws, the total number of directors constituting our Board shall be fixed exclusively by the Board. Until the date on which shares of our Class B common stock are no longer outstanding (the “Triggering Date”), all directors will be elected, appointed and removed by all common stockholders voting as a single class, with each share of Class A common stock having one vote and each share of Class B common stock having five votes. Until the Triggering Date, each of the members of our Board will be elected at an annual meeting of the stockholders and hold office until the next annual meeting of the stockholders, and until his or her successor is duly elected and qualified, or until his or her earlier death, resignation, removal or disqualification.

The Certificate of Incorporation provides further that on the Triggering Date, our Board will be divided into three classes to be comprised of the directors in office, as determined by the directors in office, with each class serving for a staggered three-year term. From the Triggering Date, Class I directors will serve an initial one-year term expiring at the first annual meeting of stockholders following the Triggering Date. Class II directors will serve an initial two-year term expiring at the second annual meeting of stockholders following the Triggering Date. Class III directors will serve an initial three-year term expiring at the third annual meeting of stockholders

following the Triggering Date. Upon the expiration of the initial term of each class of directors, the directors in that class will be eligible to be elected for a new three-year term. Our directors will hold office until their successors have been elected and qualified or until their earlier death, resignation, disqualification or removal. After our Board is classified as described in the foregoing, no director may be removed except for cause and only with the affirmative vote of at least 66²/₃% in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class.

Subject to the special rights of any series of preferred stock to elect directors, vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled only by a majority of the directors then in office, although less than a quorum, or by a sole remaining director, and not by stockholders, and the directors so chosen will hold office until the next annual or special meeting of stockholders called for that purpose and until their successors are duly elected and qualified, or until their earlier resignation or removal.

The Board seeks to ensure that the Board is composed of members whose particular experience, qualifications, attributes and skills, when taken together, will allow the Board to satisfy its oversight responsibilities effectively. New directors are approved by the Board after recommendation by the Nominating Committee. In identifying candidates for director, the Nominating Committee and the Board take into account (1) the comments and recommendations of Board members regarding the qualifications and effectiveness of the existing Board, or additional qualifications that may be required when selecting new Board members, (2) the requisite expertise and sufficiently diverse backgrounds of the Board’s overall membership composition, (3) the independence of outside directors and other possible conflicts of interest of existing and potential members of the Board, and (4) all other factors it considers appropriate.

When considering whether directors and nominees have the experience, qualifications, attributes and skills, taken as a whole, to enable the Board to satisfy its oversight responsibilities effectively in light of the Company’s business and structure, the Nominating Committee and the Board focused primarily on the information discussed in each of the directors’ individual biographies set forth above. Although diversity may be a consideration in the selection of directors, ~~who~~the Company and the Board do not have achieved success in their personal fields and who demonstrate integrity and high personal and professional ethics, sound business judgment, and willingness to devote the requisite time to their duties as director, and who will contributea formal policy with regard to the ~~Company’s overall corporate goals.~~ consideration of diversity in identifying director nominees.

Board ~~members are evaluated and selected based on their individual merit as well as in~~Leadership Structure

Our current leadership structure permits the ~~context~~roles of ~~the needs~~Chairman of the Board and Chief Executive Officer to be filled by the same or different individuals. Effective as of March 6, 2013, William H. Lyon assumed the role of Chief Executive Officer, with General Lyon continuing as Chairman of the Board and Executive Chairman. Our Board has determined this structure to be in the best interests of the Company and its stockholders at this time due to General Lyon’s extensive history with the Company. Separating the Chairman of the Board and Chief Executive Officer roles further allows the Chief Executive Officer to focus his time and energy on operating and managing the Company and leveraging the experience and perspectives of the Chairman of the Board.

Furthermore, Mr. Hunt serves as our lead independent director, and has served in such role since May 2012. As the Board’s lead independent director, Mr. Hunt holds a ~~whole. The~~critical role in assuring effective corporate governance and in managing the affairs of our Board. Among other responsibilities, Mr. Hunt:

The Board periodically reviews the leadership structure and may make changes in the future.

Under the listing requirements and rules of the NYSE, independent directors must comprise a majority of a listed company’s board of directors. In addition, NYSE rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent. Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act and compensation committee members must satisfy heightened independence criteria set forth in NYSE rules. Under NYSE rules, a director will only qualify as an “independent director” if the company’s board of directors affirmatively determines that the director has no material relationship with the company, either directly or indirectly, that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Our Board has undertaken a review of its composition, the composition of its committees and the independence of each director. Based upon information requested from and provided by each of our directors concerning his or her background, employment and affiliations, including family relationships with us, our senior management and our independent registered public accounting firm, our Board has determined that all but three of our directors, General Lyon, William H. Lyon and Michael Barr, are independent directors under the standards established by the SEC and the NYSE. In making this determination, our Board considered the current and prior relationships that each non-employee director has with us and all other facts and circumstances our Board deemed relevant in determining their independence, including the following:

Our Board held 15 meetings during fiscal year 2013. During fiscal year 2013, all incumbent directors attended at least 75% of the combined total of (i) all Board meetings and (ii) all meetings of committees of the Board of which the incumbent director was a member. Four of our directors attended our 2013 annual meeting of stockholders, which was held prior to our initial public offering in May 2013. In February 2014, the Board adopted a policy that all directors attend the annual meeting of stockholders, either in person or telephonically, absent unusual circumstances, commencing with the Annual Meeting.

Our non-management directors meet regularly in executive sessions without management, to consider such matters as they deem appropriate. It is our Board’s policy that our lead independent director presides over the executive sessions. Our Board has appointed Mr. Hunt to serve as our lead independent director. Executive sessions of our non-management directors are typically held in conjunction with each regularly scheduled Board meeting. In addition, during times when our non-management directors include directors who are not also independent directors, the independent directors also meet separately in executive session as deemed appropriate, and in any event at least one time per year.

We currently have four standing committees: an audit committee, a compensation committee, a nominating and corporate governance committee and a corporate finance committee. The charters of all four of our standing Board committees are available on our website athttp://lyonhomes.com/investors/governance. The inclusion of our website address in this proxy statement does not include or incorporate by reference the information on our website into this proxy statement.

The Company has a standing Audit Committee, which is ~~responsible~~chaired by Douglas K. Ammerman and consists of Messrs. Ammerman, Hunt and Niemann and Ms. Schell. Our Board has determined that each of these directors is independent as defined by the applicable rules of the NYSE and the SEC, and that each member of the Audit Committee meets the financial literacy and experience requirements of the applicable SEC and NYSE rules. In addition, our Board has determined that Mr. Ammerman is an “audit committee financial expert” as defined by the SEC. Except for ~~recommending~~Mr. Ammerman, none of the Audit Committee members serves on the Audit Committee of more than three public companies. As described above, our Board has determined that Mr. Ammerman’s simultaneous service on the audit committee of more than three public companies does not impair his ability to effectively serve on the Audit Committee. The Audit Committee met six times in 2013.

Our Audit Committee charter requires that the Audit Committee oversee our corporate accounting and financial reporting processes. The primary responsibilities and functions of our Audit Committee are, among other things, as follows:

The Company has a standing Compensation Committee, which is chaired by Matthew R. Niemann and consists of Messrs. Hunt, Ammerman and Niemann and Ms. Schell. Our Board has determined that each of these directors is independent under NYSE rules. The Compensation Committee met four times in 2013.

Pursuant to its charter, the primary responsibilities and functions of our Compensation Committee are, among other things, as follows:

The Compensation Committee reviews annually the independence of its compensation consultants and other advisors. In March 2012, the Compensation Committee retained Christenson Advisors (“Christenson”), as its compensation consultant to advise the Compensation Committee with respect to various elements of the Company’s executive compensation pay structure for 2012 and into 2013. In November 2013, the Compensation

Committee retained Mercer (US) Inc. (“Mercer”), as its independent compensation consultant to advise on executive and director compensation matters for the remainder of 2013 and into 2014. The Compensation Committee has reviewed the independence of Christenson’s and Mercer’s advisory role relative to the six consultant independence factors adopted by the SEC to guide listed companies in determining the independence of their compensation consultants, legal counsel and other advisors. Following its review, the Compensation Committee has determined that no conflict of interest arose from the work performed by Christenson or Mercer during the year ended December 31, 2013 or thereafter (in the case of Mercer).

The Company has a standing Nominating Committee, which is chaired by Gary H. Hunt and consists of Messrs. Hunt, Ammerman, Niemann and Redleaf and Ms. Schell. Our Board has determined that each of these directors is independent under NYSE rules. The Nominating Committee met three times in 2013.

Pursuant to its charter, the primary responsibilities and functions of our Nominating Committee are, among other things, as follows:

~~The Nominating and Corporate Governance Committee is responsible for reviewing from time to time the composition of~~

The Company has a standing Corporate Finance Committee, which is co-chaired by Mr. Niemann and Ms. Schell, and consists of Messrs. Ammerman, Niemann and Redleaf (effective as of February 2014) and Ms. Schell, in order to consider and make recommendations to the Board regarding issues impacting the financial structure and strategic direction of the Company, including, but not limited to, stock and debt issuance and repurchase policies, stock splits and other proposed changes to the Company’s capital structure, mergers, acquisitions and divestiture activities, and strategic partnerships and investments. The charter of the Corporate Finance Committee provides that each member of the Corporate Finance Committee must be a non-employee director and must be independent, as defined under applicable law and stock exchange rules.

Pursuant to its charter, the primary responsibilities of our Corporate Finance Committee are, among other things, as follows:

Our Board may establish other committees as it deems necessary or appropriate from time to time.

Our Board is actively involved in oversight of risks that could affect the Company. The Board satisfies this responsibility through full reports by each committee chair (principally, the Audit Committee chair) regarding such committee’s considerations and actions, as well as through regular reports directly from the officers responsible for oversight of particular risks within the Company.

The Audit Committee is primarily responsible for overseeing the risk management function at the Company on behalf of the Board. In carrying out its responsibilities, the Audit Committee works closely with management. The Audit Committee meets at least quarterly with members of management and, among things, receives an update on management’s assessment of risk exposures (including risks related to liquidity, credit and operations, among others). The Audit Committee chair provides periodic reports on risk management to the full Board.

In addition to the Audit Committee, the other committees of the Board consider the risks within their areas of responsibility.

In 2014, at the request of the Compensation Committee, Mercer conducted an evaluation of the Company’s compensation program risk profile in collaboration with Company management, including an assessment of all Company compensation plans, with a particular focus on plans in which senior executives participate, using Mercer’s qualitative evaluation criteria based on best practices for compensation design and risk management. The Compensation Committee and management reviewed and agreed with Mercer’s conclusion that the Company’s compensation policies and practices do not present risks that are reasonably likely to have a material adverse effect on the Company.

The individuals who served as members of the Compensation Committee during fiscal year 2013 are Douglas K. Ammerman, Michael Barr, Gary H. Hunt, Matthew R. Niemann and Lynn Carlson Schell. During their service on the Compensation Committee none of the members had any relationship requiring disclosure under Item 404 of Regulation S-K, and none of the members of the Compensation Committee has ever been an officer or employee of the Company or any of its subsidiaries. None of the Company’s named executive officers has ever served as a director or member of the Compensation Committee (or other Board committee performing equivalent functions) of another entity, one of whose executive officers served in either of those capacities for the Company.

Any stockholder or other interested party may contact an individual director or the lead independent director (either by name or title), our Board as a group, or a specified Board committee or group, including the non-management directors as a group, by sending written communication to: William Lyon Homes, 4695 MacArthur Court, 8^th Floor, Newport Beach, California 92660, Attention: Corporate Secretary.

Management will initially receive and process communications before forwarding them to the addressee(s). We generally will not forward to the directors a communication that is primarily commercial in nature, relates to an improper or irrelevant topic, or requests general information about the Company.

Our Board has adopted a Code of Business Conduct and Ethics (the “Code of Ethics”), that is applicable to all directors, employees and officers of the Company. The Code of Ethics constitutes the Company’s “code of ethics” within the meaning of Section 406 of the Sarbanes-Oxley Act. The Company intends to disclose future amendments to certain provisions of the Code of Ethics, or waivers of such provisions applicable to the Company’s directors and executive officers, on the Company’s website athttp://lyonhomes.com/investors/governance.

The Code of Ethics is available on the Company’s website at ~~www.lyonhomes.com.~~http://lyonhomes.com/investors/governance. In addition, printed copies of the ~~Corporate Governance Guidelines and the Nominating and Corporate Governance Committee Charter~~Code of Ethics are available upon written request to Investor Relations, William Lyon Homes, ~~4490 Von Karman Avenue, Newport Beach, California 92660.~~

The Corporate Governance Guidelines require that a majority of the full Board and all members of the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee qualify as “independent” directors under the standards established by the SEC and the NYSE. A director qualifies as independent if (a) the Board affirmatively determines that the director has no material relationship with the Company other than in such person’s capacity as a director and (b) the director is not otherwise considered non-independent according to the standards established by the NYSE. When assessing the materiality of a director’s relationship with the Company, the Board may consider all relevant facts and circumstances, including the director’s commercial, industrial, banking, consulting, legal, and accounting relationships.

The Board has determined that Messrs. Greene, Hunt and Meruelo and Dr. Laffer, each of whom is a nominee for election at the Annual Meeting, are independent under these standards. In making this determination, the Board took into account the fact that Mr. Meruelo is a party to an agreement with the Company, pursuant to which he is eligible to receive a finder’s fee based upon the distributions received by the Company from a joint venture development project relating to a portion of the Fort Ord military base in Monterey County, California. The Board also took into account the fact that Dr. Laffer is Chief Executive Officer and the controlling stockholder of Laffer Associates, which provided economic consulting services to the Company in 2004 and 2005 for which it received fees of less than $30,000 per year. In addition, the Board took into account the fact that a company of which Mr. Hunt is a member provides consulting services to certain entities controlled by General William Lyon, but which are not part of the Company or its subsidiaries. The Board concluded that the nature and scope of these relationships did not preclude a finding of independence under the applicable NYSE rules and were otherwise not material in that such relationships would not interfere

~~with Mr. Meruelo’s, Mr. Hunt’s or Dr. Laffer’s exercise of independent judgment in their respective service as a director.~~

Currently, one-half of the full Board is independent. The Board expects to add one additional independent director to the Board after January 1, 2006, as a result of which a majority of the full Board will be independent.

Interested parties and stockholders may communicate directly, and if desired confidentially, with the Board of Directors, the Chairman of the Board, the Chair of any committee, or the non-management directors as a group about matters of general interest to stockholders in the manner posted from time to time on the Company’s website. The current method for such communications is by sending written communications to the attention of the Corporate Secretary at the Company’s principal executive offices, William Lyon Homes, 4490 Von Karman Avenue,4695 MacArthur Court, 8th Floor, Newport Beach, California 92660. The ~~Secretary will compile these communications and periodically deliver them to~~inclusion of our website address herein does not include or incorporate by reference the Chair of the Audit Committee, unless otherwise specifically addressed. Communications relating to concerns about accounting, internal controls, disclosure controls and procedures, audits or violations of the Code of Ethics may be submitted confidentially or anonymously. The Company’s policies prohibit retaliation or adverse action against anyone for raising in good faith andinformation on ~~a reasonable basis an integrity concern or helping to resolve an integrity concern.~~our website into this proxy statement.

The full Board of Directors of the Company had twelve meetings in 2004. During 2004, each incumbent director of William Lyon Homes who is being nominated for re-election attended at least 75% of the aggregate of (i) the twelve meetings of the Board of Directors, and (ii) the total number of meetings of the committees on which he served (during the periods that he served). The Board does not have an Executive Committee. The full Board performs those functions itself. Although the Company has no formal policy with regard to Board members’ attendance at the Company’s Annual Meetings of Holders of Common Stock, it is customary for the Company’s Board members to attend such Annual Meetings. All of the Board members attended the Company’s 2004 Annual Meeting of Holders of Common Stock, and the Company expects that all Board members will attend the Company’s 2005 Annual Meeting of Holders of Common Stock.

The Company’s non-management directors meet in executive sessions at least two times per year, either before or after regularly-scheduled Board meetings, as required by the Company’s Corporate Governance Guidelines. If the non-management directors include directors that are not independent, the independent directors meet in executive sessions at least once a year. The Chair of the Audit Committee presides at these executive sessions. Any non-management director may request that an executive session of the non-management members of the Board be scheduled. Following such sessions, the Chair of the Audit Committee (or another designated director) will discuss with the Chairman of the Board and the Chief Executive Officer, to the extent appropriate, matters emanating from the executive sessions.

~~Nominating and Corporate Governance Committee.~~ On February 18, 2004, the Board of Directors formed the Nominating and Corporate Governance Committee pursuant to Section 141(c)(2) of the Delaware General Corporation Law and Article V of the Company’s Bylaws. The committee is chaired by Mr. Meruelo and currently consists of Messrs. Greene, Hunt and Meruelo and Dr. Laffer. The Board has determined that all committee members are independent under the standards established by the SEC and the NYSE. The functions of the Nominating and Corporate Governance Committee are to:REGISTERED PUBLIC ACCOUNTING FIRM

The Nominating and Corporate Governance Committee had two formal meetings in 2004. A copy of the current charter for the Nominating and Corporate Governance Committee is available on the Company’s website at www.lyonhomes.com. In addition, printed copies of the charter for the Nominating and Corporate Governance Committee are available upon written request to Investor Relations, William Lyon Homes, 4490 Von Karman Avenue, Newport Beach, California 92660. The charter is reviewed annually.

~~Compensation Committee~~. The Company has a standing Compensation Committee, which is chaired by Dr. Laffer and currently consists of Messrs. Greene, Hunt and Meruelo and Dr. Laffer. The Board has determined that all committee members are independent under the standards established by the SEC and the NYSE. The functions of the Compensation Committee are to: make recommendations to the Board of Directors regarding the hiring or termination of senior management, review and approve annual salaries and other compensation of the Company’s senior management, review and approve stock options and other grants pursuant to plans, review and administer existing stock options and other plans and recommend changes to the Board of Directors, review and recommend to the Board of Directors compensation plans or management perquisites, review and recommend to the Board of Directors the type and amount of compensation for non- employee directors, and prepare and approve required reports. The Compensation Committee also administers the William Lyon Homes 2000 Stock Incentive Plan. The Compensation Committee had two formal meetings in 2004. A copy of the current charter for the Compensation Committee is available on the Company’s website at www.lyonhomes.com. In addition, printed copies of the charter for the Compensation Committee are available upon written request to Investor Relations, William Lyon Homes, 4490 Von Karman Avenue, Newport Beach, California 92660. The charter is reviewed annually. The report of the Compensation Committee for the 2004 fiscal year is found on page 21 of this proxy statement.

~~Audit Committee~~~~. The Company has a standing Audit Committee, which is chaired by Mr. Greene and currently consists of Messrs. Greene, Hunt and Meruelo.~~ The Audit Committee ~~must have at least three members, each~~ of ~~whom must meet certain criteria as set forth in the Audit Committee Charter adopted by the Board of Directors. The~~our Board has determined that all committee members are independent and financially literate under the standards established by the SEC and the NYSE. The Board has determined that for purposes of NYSE requirements Mr. Greene has “accounting or related financial management expertise.” No current member of the Audit Committee is an “audit committee financial expert”selected KPMG LLP (“KPMG”) as defined by the SEC. The Audit Committee had a member who qualified as an audit committee financial expert until such member’s resignation from the Board in August 2005. The Board will seek to identify or add an additional director to serve as a member of the Audit Committee who would qualify as an audit committee financial expert. Among other things, the functions of the Audit Committee are to:

~~The~~ Audit Committee, meets with the independent registered public accounting firm and internal auditors, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls, and the Company’s financial reporting. The Audit Committee has selected Ernst & Young LLPformally engaged KPMG as the Company’s independent registered public accounting firm for the fiscal year ~~ending~~ended December 31, ~~2005, and is recommending that the Company’s stockholders ratify this appointment at the Company’s Annual Meeting.~~

The Audit Committee had five formal meetings in 2004. A copy of the current charter for the Audit Committee is attached hereto as Appendix A and is also available on the Company’s website at www.lyonhomes.com. In addition, printed copies of the charter for the Audit Committee are available upon written request to Investor Relations, William Lyon Homes, 4490 Von Karman Avenue, Newport Beach, California 92660. The charter is reviewed annually. The report of the Audit Committee for the 2004 fiscal year is found on page 11 of this proxy statement.

All directors hold office until the next Annual Meeting of Holders of Common Stock and until their successors are duly elected and qualified. In 2004, outside directors received an annual retainer of $30,000 per year plus $1,000 for each board of directors meeting attended and $1,000 per year per committee for service on committees of the board of directors, which are paid in cash. The Company has adopted the William Lyon Homes Outside Directors Deferred Compensation Plan effective as of February 11, 2002 and the William Lyon Homes 2004 Outside Directors Deferred Compensation Plan effective as of December 28, 2004, pursuant to which each outside director may elect to defer payment of a portion or all of his annual compensation until his retirement date or a fixed payment date in the future at which time he would receive all deferred amounts and accumulated earnings thereon, if any, in a lump sum. No current directors have elected to defer director compensation under the plans.

Under the Company’s Non-Qualified Retirement Plan for Outside Directors, each outside director is eligible to receive $2,000 per month beginning on the first day of the month following death, disability or retirement at age 72; or, in the case of an outside director who ceases participation in the plan prior to death, disability or retirement at age 72 but has completed at least ten years of service as a director, eligibility for benefit payments pursuant2012. Prior to the ~~plan begins on the first day~~engagement of ~~the month following the latter of (a) the day on which such person attains the age of 65, or (b) the day on which such person’s service terminates after completing at least ten years of service~~KPMG, Windes & McClaughry Accountancy Corporation (currently known as a director. The monthly payments will continue for the number of months that equals the number of months the outside director served as a director and are payable to the director’s beneficiary in the event of the director’s death. If a retired outside director receiving payments under the plan resumes his status as a director or becomesWindes, Inc.), an ~~employee, the payments under the plan are suspended during the period of such service.~~

No options were granted during 2004 to any director. On May 9, 2000, Mr. Frankel was granted options to purchase 10,000 shares of common stock at a price of $8.6875 per share. These options vested in the following installments: one-third on May 9, 2001, one-third on May 9, 2002 and one-third on May 9, 2003. All of the options expire if unexercised on May 9, 2010. Mr. Frankel had exercised all available options prior to 2004. Mr. Cable was granted options to purchase 50,000 shares of common stock. The option price, vesting schedule and expiration date of Mr. Cable’s options are the same as those granted to the other directors. The grant of options to Mr. Cable is also discussed in the section on “Executive Compensation”. No options were granted to General William Lyon or William H. Lyon.

The Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors. The Company’s management has the primary responsibility for the financial statements, for maintaining effective internal control over financial reporting, and for assessing the effectiveness of internal control over financial reporting. In fulfilling its oversight responsibilities, the Committee reviewed and discussed the audited financial statements in the Annual Report with the Company’s management, including a discussion of the quality, not just the acceptability, of the accounting principles; the reasonableness of significant judgments and estimates; and the clarity of disclosures in the financial statements. The Company’s management has represented to the Committee that the financial statements were prepared in accordance with accounting principles generally accepted in the United States.

~~The Committee reviewed with the~~ independent registered public accounting firm ~~which is responsible for expressing an opinion of~~(“Windes”), had been the ~~conformity of those audited financial statements with U.S. generally accepted accounting principles, its judgments as to the quality, not just the acceptability, of the~~ Company’s accounting principles and such other matters as are required to be discussed with the Committee by Statement on Auditing Standards No. 61 (as amended), other standards of the Public Company Accounting Oversight Board (United States), rules of the Securities and Exchange Commission, and other applicable regulations. In addition, the Committee has discussed with the independent registered public accounting firm the firm’s independence from Company management and the Company, including the matters in the written disclosures and letter from the firm required by Independence Standards Board Standard No. 1, and considered the compatibilityfirm. Upon its completion of ~~non-audit services with the independent registered public accounting firm’s independence.~~

~~The Committee also reviewed management’s report on~~ its assessment of the effectiveness of the Company’s internal control over financial reporting and the independent registered public accounting firm’s report on management’s assessment and the effectiveness of the Company’s internal control over financial reporting. The Committee discussed with management and the independent registered public accounting firm control deficiencies identified during the course of the assessment and the audit ~~and management’s plan to remediate those control deficiencies.~~

The Committee discussed with the Company’s internal auditors and independent registered public accounting firm the overall scope and plans for their respective audits. The Committee meets with the internal

auditors and the independent registered public accounting firm, with and without management present, to discuss the results of their examinations; their evaluations of the Company’s internal control, including internal control over financial reporting; and the overall quality of the Company’s financial ~~reporting.~~

~~In reliance on~~statements for the reviews and discussions referred to above, the Committee recommended to the Board of Directors, and the Board has approved, that the audited financial statements and management’s assessment of the effectiveness of the Company’s internal control over financial reporting be included in the Annual Report on Form 10-K for thefiscal year ended December 31, ~~2004 filed by the Company with the Securities and Exchange Commission. The Committee and the Board also have recommended, subject to stockholder approval, the selection of Ernst & Young LLP~~2011, Windes was dismissed as the Company’s independent registered public accounting ~~firm~~firm.

Windes’ reports for ~~2005.~~each of the years ended December 31, 2010 and December 31, 2011 did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the Company’s fiscal years ended December 31, 2010 and December 31, 2011, and through the current date there were no disagreements between Windes and us on any matter of accounting principles or practices, financial statements disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Windes, would have caused Windes to make reference to such disagreements in the firm’s reports on our financial statements for such periods. In addition, no reportable events, as defined in Item 304(a)(1)(v) of Regulation S-K, occurred during our two most recent fiscal years or the interim period preceding Windes’ dismissal.

~~The Committee is governed by~~During the Company’s fiscal years ended December 31, 2010 and December 31, 2011, and the subsequent interim period through April 24, 2012, neither the Company nor anyone operating on its behalf has consulted with KPMG regarding (i) either the application of accounting principles to a ~~charter, a current copy~~specific transaction, either completed or proposed; or the type of ~~which is available~~audit opinion that might be rendered on the Company’s ~~website at www.lyonhomes.com. The Committee held five meetings during fiscal year 2004. The Committee is comprised solely~~financial statements, or (ii) any matter that was either the subject of ~~independent directors as defined~~a disagreement of the type described in Item 304(a)(1)(iv) of Regulation S-K, or a “reportable event” involving the Company, within the meaning of Item 304(a)(1)(v) of Regulation S-K. Furthermore, KPMG has not provided the Company a written report or oral advice that KPMG concluded was an important factor considered by the ~~New York Stock Exchange listing standards~~Company in reaching a decision as to any accounting, auditing or financial reporting issue.

We have provided Windes and ~~Rule 10A-3~~KPMG with a copy of the ~~Securities Exchange Act~~foregoing disclosure prior to the filing of ~~1934.~~

The Audit Committee Report and the disclosures concerning the independence of the members of the Audit Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy ~~statement into any filing under~~statement. In addition, we provided Windes with a copy of a Form 8-K disclosing the ~~Securities Act of 1933 or the Securities Exchange Act of 1934, except~~above matters, which was filed on April 30, 2012. Windes furnished us with a letter addressed to the ~~extent~~SEC stating that Windes agreed with such disclosure as related to Windes, and that Windes was not in a position to agree or disagree with such disclosure as related to KPMG. A copy of such letter, dated April 27, 2012, was filed as Exhibit 16.1 to the ~~Company specifically incorporates this information~~Form 8-K.

The fees billed for professional services provided by ~~Ernst & Young~~KPMG, LLP, or KPMG, in fiscal years ~~2004~~2013 and ~~2003~~2012 were:

In the above table, in accordance with the definitions of the SEC, “Audit Fees” include fees for the audit of the Company’s consolidated financial statements included in its Annual Report on Form 10-K, review of the unaudited financial statements included in its quarterly reports on Form 10-Q, comfort letters, consents, assistance with documents filed with the SEC, and accounting and reporting consultation in connection with the audit ~~and /or~~and/or quarterly reviews. In 2004, “Audit Fees” also includes fees incurred in connection with the audit of the Company’s internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002. “Tax Fees” include fees for tax compliance and tax planning. “Audit-Related Fees” are fees for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and includes fees for audits of separate financial statements of consolidated joint ventures. “All Other Fees” are fees for any services not included in the first three categories.

The Audit Committee has adopted a policy that requires advance approval of all audit, audit-related, tax services, and other services performed by the independent registered public accounting firm. The policy provides for pre-approval by the Audit Committee of specifically defined audit and non-audit services. Unless the specific service has been previously pre-approved with respect to that year, the Audit Committee must approve the permitted service before the independent auditors are engaged to perform it. The Audit Committee has delegated to the Chair of the Audit Committee authority to approve permitted services provided that the Chair reports any decisions to the Committee at its next scheduled meeting.

The Audit Committee considered the compatibility of the provision of other services by ~~Ernst & Young LLP~~its registered public accountant with the maintenance of ~~Ernst & Young LLP’s~~their independence. The Audit Committee approved all audit and non-audit services provided by ~~Ernst & Young~~KPMG in ~~2004.~~2013 and 2012.

Our Audit Committee issued the following report for inclusion in this proxy statement for the 2014 annual meeting of stockholders and the Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

1. The Audit Committee has reviewed and discussed the audited consolidated financial statements for the year ended December 31, 2013 with management of William Lyon Homes and with William Lyon Homes’ independent registered public accounting firm, KPMG LLP.

2. The Audit Committee has discussed with KPMG LLP those matters required by Statement on Auditing Standards 16, “Communications with Audit Committees,” as adopted by the Public Company Accounting Oversight Board (the “PCAOB”).

3. The Audit Committee has received and reviewed the written disclosures and the letter from KPMG LLP required by the PCAOB regarding KPMG LLP’s communications with the Audit Committee concerning the accountant’s independence, and has discussed with KPMG LLP its independence from William Lyon Homes and its management.

4. Based on the review and discussions referenced to in paragraphs 1 through 3 above, the Audit Committee recommended to our Board that the audited consolidated financial statements for the year ended December 31, 2013 be included in the Annual Report on Form 10-K for that year for filing with the SEC.

SECURITY OWNERSHIP OF ~~PRINCIPAL STOCKHOLDERS~~DIRECTORS AND ~~MANAGEMENT~~EXECUTIVE OFFICERS

The following table sets forth ~~certain~~ information as toof the ~~number~~record date, April 4, 2014, regarding the beneficial ownership of ~~shares~~our Class A common stock and Class B common stock by: (i) each of ~~Common Stock beneficially owned~~our directors and director nominees; (ii) each of our named executive officers for the year ended December 31, 2013; (iii) all of our current directors and executive officers as ~~of September 30, 2005. The following table includes information for (a)~~a group; and (iv) each person ~~or group that is~~ known ~~to the Company~~by us to be the beneficial owner of more than 5% of any class of our outstanding voting securities based on a review of publicly available statements of beneficial ownership filed with the ~~outstanding shares of Common Stock, (b) each of~~SEC on Schedules 13D and 13G through April 4, 2014. Unless otherwise indicated in the ~~directors~~table, the persons and ~~nominees of the Company, (c) each executive officer~~entities named in the ~~Summary Compensation Table,~~table have sole voting and ~~(d) all directors and executive officers~~sole investment power with respect to the shares set forth opposite the stockholder’s name, subject to community property laws, where applicable. Unless otherwise noted below, the address of ~~the Company as a group.~~each stockholder below is c/o William Lyon Homes, 4695 MacArthur Court, 8th Floor, Newport Beach, California 92660.

Except as otherwise indicated in the above notes, shares shown as beneficially owned are those as to which the named person possesses sole voting and investment power. However, under California law, personal property owned by a married person may be community property which either spouse may manage and control. The Company has no information as to whether any shares shown in this table are subject to California community property law.

(10)	Includes, in part, (i) 17,130 shares of unvested restricted stock and (ii) 17,678 shares of Class A common stock subject to options exercisable within 60 days of April 4, 2014.

(11)	Includes, in part, 6,383 shares of unvested restricted stock.

(12)	Includes, in part, (i) 14,261 shares of Class A common stock and (ii) 3,968 shares of unvested restricted stock, in each case held by a solo defined benefit plan of which Mr. Hunt is the sole beneficiary.

(13)	Includes, in part, 6,211 shares of unvested restricted stock.

(14)	Includes, in part, 5,866 shares of unvested restricted stock.

(15)	Includes, in part, (i) 294,146 shares of unvested restricted stock and (ii) 182,741 shares of Class A common stock subject to options exercisable within 60 days of April 4, 2014.

(16)

Luxor Capital Group LP (“Luxor”), acts as the investment manager of private investment funds that own the shares (collectively, the “Luxor Investors”). Luxor Management, LLC is the general partner of Luxor. Christian Leone is the managing member of Luxor Management, LLC. Luxor, Luxor Management, LLC and Christian Leone are deemed to

~~WILLIAM LYON HOMES MANAGEMENT~~

have shared voting and dispositive power over the securities held by each of the Luxor Investors. The address of Luxor is 1114 Avenue of the Americas, 29th Floor, New York City, New York 10036. Pursuant to the Stockholders Agreement described elsewhere in this proxy statement, the Luxor Investors have agreed to vote their shares in favor of a certain number of director nominees supported by Lyon LLC and the Paulson Investor (as defined below).

(17)

Paulson & Co. Inc. (“Paulson”) is an investment advisor registered under the Investment Advisors Act of 1940 that furnishes investment advice to and manages various onshore and offshore investment funds and separately managed accounts (collectively, the “Funds”). The shares included in this table are held by WLH Recovery Acquisition LLC, a Delaware limited liability company (the “Paulson Investor”), and the Paulson Investor is one of the Funds. In its role as investment advisor and manager of the Funds, Paulson possesses voting and/or investment power over the ordinary shares owned by the Funds. As the President and sole Director of Paulson, John Paulson may be deemed to have voting and/or investment power over such shares. The address for the Funds is c/o Paulson & Co. Inc., 1251 Avenue of the Americas, NY, NY 10020. Pursuant to the Stockholders Agreement described elsewhere in this proxy statement, the Paulson Investor has agreed to vote its shares in favor of a certain number of director nominees supported by Lyon LLC and the Luxor Investor.

(18)

Based on a Schedule 13G filed with the SEC on February 13, 2014, Goldman Sachs Asset Management, L.P. and GS Investment Strategies, LLC (collectively, “Goldman Sachs Asset Management”), have shared voting power over 1,340,368 shares and shared dispositive power over 1,397,449 shares of our Class A Common Stock. The address of Goldman Sachs Asset Management is 200 West Street, New York, NY 10282.

(19)

Based on a Schedule 13G filed with the SEC on April, 2014, Citadel Advisors LLC (“Citadel Advisors”), Citadel Advisors Holdings II LP (“CAH2”), Citadel GP LLC (“CGP”), and Mr. Kenneth Griffin (collectively, the “Citadel Reporting Persons”), have shared dispositive and voting power over 1,403,939 shares of our Class A Common Stock owned by Citadel Equity Fund Ltd. (“CEF”), Surveyor Capital Ltd. (“SC”), and Citadel Securities LLC (“Citadel Securities”). Citadel Advisors is the portfolio manager for CEF and SC. CAH2 is the managing member of Citadel Advisors. CALC III LP (“CALC3”), is the non-member manager of Citadel Securities. CGP is the general partner of CALC3 and CAH2. Mr. Griffin is the President and Chief Executive Officer of, and owns a controlling interest in, CGP. The address of each of the Citadel Reporting Persons is c/o Citadel LLC, 131 S. Dearborn Street, 32^nd Floor, Chicago, Illinois.

This Compensation Discussion and Analysis section discusses the material elements of the compensation programs and policies in place for the Company’s named executive officers (“NEOs”), who for 2013 were:

As previously disclosed, effective March 6, 2013: the Board approved (i) a newly established role of Executive Chairman for General William Lyon, (ii) the appointment of William H. Lyon, the Company’s then President and Chief Operating Officer, to the role of Chief Executive Officer and (iii) the appointment of Matthew R. Zaist, the Company’s then Executive Vice President, to the role of President and Chief Operating Officer.

Our executive compensation programs emphasize pay-for-performance and alignment of executive pay with stockholder interests. As illustrated by the financial and operating results below, 2013 represented a hallmark year for the Company (all results are with comparison to full year 2012).

Other key indicators of our successful 2013 fiscal year included, among other things:

In addition to the strong financial and operational performance we achieved in 2013, during the year we strengthened our balance sheet and enhanced our financial flexibility with several successful capital markets transactions including our May IPO and a $100 million tack-on bond offering in October, collectively generating $263.7 million of net proceeds for the Company which we used for general corporate purposes, including substantial investment in land and land development, enabling us to lay the foundation for our growth plans.

The goals of the Company’s compensation program are to provide significant rewards for successful performance and to encourage retention of top executives who may have attractive opportunities at other companies, given the highly competitive homebuilding industry, and to align executive pay with the interests of the Company’s stockholders. At the same time, the Company tries to keep its selling, general and administrative, (“SG&A”), costs at competitive levels when compared with other major homebuilders.

The Company’s executive compensation decisions are ~~father~~made by the Compensation Committee, which is composed entirely of independent non-employee members of the Company’s Board. The Compensation Committee receives recommendations from the Company’s senior executive management team regarding the compensation of the Company’s executives. The Compensation Committee also consults with outside independent compensation consultants as it deems appropriate. In March 2012, the Compensation Committee retained Christenson Advisors as its independent compensation consultant to advise the Compensation Committee with respect to various elements of our executive compensation pay structure. In 2012 and ~~son.~~early 2013, Mr. William H. Lyon and Mr. Zaist were involved in the compensation process by making recommendations to the Compensation Committee regarding compensation for the NEOs and other senior executives and by working with Christenson Advisors to give them the information necessary to enable them to complete their reports.

In general, the Compensation Committee strives to achieve an appropriate mix between equity incentive awards and cash payments in order to meet its compensation objectives. The objective of the Company’s non-cash and long-term incentive-based programs is to align the compensation of the NEOs with the interests of the

Company’s stockholders. However, the Compensation Committee does not have rigid apportionment goals or policies for allocating compensation between long-term and short-term compensation or cash and non-cash compensation. The Company’s mix of compensation elements is designed to reward recent results and motivate long-term performance through a combination of cash and equity incentive awards. The differences in NEO compensation levels reflect to a significant degree the varying roles and responsibilities of each NEO.

During the first quarter of 2013, the Compensation Committee reviewed the Company’s compensation programs and practices in light of certain comparative data on long-term equity compensation, base salaries and bonuses compiled by its independent compensation consultant, Christenson Advisors, at the request of the Compensation Committee. Given the anticipation that the Company would become publicly traded, Christenson Advisors compiled information on the compensation practices of a public homebuilder peer group that generally included the following ~~table lists~~companies: Beazer Homes, DR Horton, Hovnanian Enterprises, KB Home, Lennar, MDC Holdings, Meritage Homes, Pulte Group, Ryland Group, Standard Pacific and Toll Brothers. In selecting the homebuilders most comparable to the Company to be included in the peer group, Christenson Advisors focused on companies’ size, location and development projects, as well as the background and experience of management. Christenson also provided the Compensation Committee with select compensation data for a number of private homebuilder companies, based on Christenson’s survey of such companies.

In setting the compensation levels of the Company’s executive officers for 2013, the Compensation Committee reviewed the peer group data compiled by Christenson Advisors and ~~provides their respective ages~~relied on Christenson Advisors’ peer group analyses of public and private homebuilders, utilizing this data to inform the Compensation Committee’s decisions regarding compensation levels for the Company’s executive officers for 2013. In arriving at its decisions, the Compensation Committee generally benchmarked its decisions against the bottom quartile of the public homebuilder peer group companies and the top quartile of the private homebuilder data in the analyses provided by Christenson Advisors. Benchmarking against peer group companies was one aspect of the process used to establish fiscal year 2013 compensation, as the Compensation Committee also relied on its experience and judgment as well as the Company’s recent performance and restructuring and the current economic environment to set overall compensation levels. The Compensation Committee also based its determinations for 2013 compensation levels on each individual NEO’s leadership qualities, operational performance, business responsibilities, career with our company, current compensation arrangements and long-term potential to enhance stockholder value. The Compensation Committee was advised by Christenson Advisors that 2013 overall compensation for our NEOs fell within the targeted benchmark of ~~September 30, 2005~~the bottom quartile of the public homebuilder peer group companies and ~~their current positions.~~the top quartile of the private homebuilders surveyed by Christenson, adequately reflecting the Company’s relative market position and growth as it emerged from restructuring.

In November 2013, the Compensation Committee retained Mercer (US) Inc. as its independent compensation consultant to advise on executive and director compensation matters for 2014.

The Company’s Compensation Committee generally reviews the base salary of the Company’s NEOs annually. For 2013, with respect to all NEOs other than General Lyon, for whom salary was the principal component of compensation, the Company does not regard salary as the principal component of compensation, and also uses short-term annual incentive bonuses and long-term equity incentives to reward performance and loyalty while keeping SG&A costs competitive.

Effective March 11, 2013, the base salaries of Messrs. William H. Lyon, Severn, Zaist, Doyle and Robinson were increased as reflected below, based in part on the Compensation Committee’s desire to benchmark against the bottom quartile of the public homebuilder peer group companies and the top quartile of the private homebuilder data in the analyses provided by Christenson Advisors in early 2013, as well as the Compensation

Committee’s determination that such increases were warranted based on the Company’s and the executives’ performances during 2012, and to reflect the change in roles for Messrs. William H. Lyon and Zaist. The table below shows each NEO’s annual base salary for each of the 2012 and 2013 fiscal years.

For fiscal year 2013, General William Lyon was eligible to earn a cash bonus of up to 100% of his base salary, to be determined based upon the recommendation of the Compensation Committee, in its discretion.

Pursuant to the annual incentive cash bonus program for 2013 adopted by the Board, certain of the NEOs were eligible to earn a cash bonus up to 150% of his target bonus opportunity based on the Company’s achievement of a pre-established consolidated EBITDA target (in the case of Messrs. William H. Lyon, Zaist, Severn and Robinson) and, in the case of Mr. Doyle, a blend of consolidated EBITDA (weighted 30%) and regional EBITDA (weighted 70%), in each case with such adjustments as may be approved by the Compensation Committee, including positive and negative discretion, as applicable. Bonus payouts as a percentage of target cash bonus opportunity for NEOs are set forth below:

Achievement of performance criteria in between the threshold, target and maximum levels above would result in payouts calculated on a linear, 2:1 increase or decrease (e.g., if 87.5% of the target is achieved, the NEO’s payout will be 75% of his target bonus opportunity, or if 110% of the target is achieved, the NEO’s payout will be 120% of his target bonus opportunity). Target bonus opportunities were 100% of base salary for each of Messrs. William H. Lyon, Zaist and Doyle, 70% of base salary for Mr. Severn and 67% of base salary for Mr. Robinson.

As permitted under the terms of the 2013 annual incentive cash bonus program, consolidated EBITDA, meaning net income (loss) attributable to the Company, was adjusted for benefit from income taxes, interest expense (incurred and capitalized), amortization of capitalized interest included in cost of sales, stock based compensation, loss on sale of fixed asset and depreciation and amortization. The 2013 consolidated Adjusted EBITDA target was set at a level that was 192% greater than actual results of such metric for the 2012 fiscal year. On a regional level, the target for California was set at a level that was also significantly higher than what was actually achieved in 2012.

The table below shows the Adjusted EBITDA goal established and our actual performance for 2013:

Based on the achievement of Company and regional levels of Adjusted EBITDA performance at above 125% of target levels, and the Compensation Committee’s determination not to exercise negative discretion to reduce any individual performance award, the Compensation Committee approved payouts under the 2013 annual incentive cash bonus program at 150% of target bonus for all eligible NEOs, including Messrs. William H. Lyon, Zaist, Severn, Doyle and Robinson. The Compensation Committee determined to award a 2013 cash bonus to General Lyon at the maximum amount of $1,000,000 based on the Company’s performance during the 2013 fiscal year in comparison to its business plan, the experience and tenure of General Lyon, General Lyon’s key contacts and relationships in the industry enhancing business growth and opportunities for the Company, General Lyon’s continuing mentorship role for key Company executives, General Lyon’s employment agreement, and General Lyon’s responsibilities, contributions and overall compensation. Set forth below are the 2013 cash bonus payouts for each NEO:

On February 27, 2013, the Compensation Committee determined to award to certain Company executives who reside in California, including Messrs. Zaist, Severn, Doyle and Robinson, an additional cash payments intended to offset the impact of higher income tax rates retroactively imposed on such executives as a result of the passage of the State of California’s Proposition 30 in November 2012, or Prop 30. In connection with certain restricted stock awards granted to these executives in October 2012, the executives took action anticipating the tax impact at the time, but Prop 30 had the effect of imposing additional taxes subsequent to such action and taxable events. The additional payments were one-time in nature and meant to cover such additional taxes owed by the executive due to Prop 30. The aggregate amount of these cash awards were as follows: Mr. Zaist ($61,971); Mr. Severn ($6,865); Mr. Doyle ($19,151); and Mr. Robinson ($5,148).

On February 27, 2013, the Board adopted the 2013 long-term equity incentive program (the “2013 LTIP”). Under the 2013 LTIP, an aggregate of 173,793 shares of performance-based restricted shares of the Company’s Class A Common Stock (giving effect to the Common Stock Recapitalization) were awarded to Messrs. William H. Lyon, Zaist, Severn, Doyle and Robinson with a grant date of March 1, 2013, representing the maximum number of shares of performance-based restricted stock that may be earned under the 2013 LTIP, subject to forfeiture based on service and performance conditions. The number of shares reflected below represents the target number of shares that may be earned, or Target Shares, based on the Company’s achievement of a pre-established ROE performance target as of the end of the 2013 fiscal year, with such adjustments as may be approved by the Compensation Committee. ROE is calculated as the percentage equivalent of the fraction resulting from dividing the Company’s net income available to common stockholders during the 2013 performance period by the Company’s total stockholders’ equity, including redeemable preferred convertible stock, at December 12, 2012, each calculated in accordance with generally accepted accounting principles.

One-third of the earned shares will vest on each of the first, second and third anniversaries of the grant date, subject to each officer’s continued service through each such vesting date. The performance-based restricted stock opportunities for certain of our NEOs are set forth below:

Achievement of the ROE target in between the threshold, target and maximum levels above would result in Target Shares earned calculated on a linear, 2:1 increase or decrease (e.g., if 87.5% of the target is achieved, the NEO’s payout will be 75% of his Target Shares, or if 110% of the target is achieved, the NEO’s payout will be 120% of his Target Shares).

Target ROE for 2013 was 13.49%. In February 2014, the Compensation Committee determined that the Company achieved ROE of 23.9%, or 178% of target (707% of target if you include the $95.6 million deferred tax asset valuation allowance reversal), resulting in each NEO listed above earning 150% of his Target Shares.

In addition, in November 2013, the Compensation Committee approved an amendment to the existing five-year stock options granted to certain executives, including certain NEOs, in October 2012, to extend the mandatory exercise period of such options. The existing award agreements for the five-year options had been subject to mandatory exercise upon the earlier of the expiration of the lock-up period following an initial public offering of the Company or the expiration of the five-year term, provided, that if the initial public offering occurred prior to the applicable vesting date of the options, such options would be exercised upon the applicable vesting date. The amendment to the five-year option agreements modified the awards such that the mandatory exercise period was extended to the first open trading window under the Company’s Insider Trading Policy, which had been adopted in connection with the Company’s May 2013 IPO, during the first quarter of 2014, and for the subsequent fiscal year for any unvested tranches as of such date, such that any mandatory exercise of the five-year options would occur only during an open trading window.

The Company provides certain of our management team and more senior executives, including our NEOs, with certain perquisites and other personal benefits that the Company believes are reasonable and consistent with the overall compensation program to better enable the Company to attract and retain employees for key positions. These perquisites include an annual automobile allowance of $4,800 ($400 per month), payable in accordance with the Company’s regular payroll schedule, and reimbursement for gasoline for use of one personal vehicle. Our NEOs are also eligible to participate in an executive supplemental health insurance plan.

In addition, the Company has established a 401(k) retirement savings plan for its employees, including the NEOs, who satisfy certain eligibility requirements. Under the 401(k) plan, eligible employees may elect to contribute pre-tax amounts, up to a statutorily prescribed limit, to the 401(k) plan. For 2013, the prescribed annual limit was $17,500, plus up to an additional $5,500 “catch-up” contribution available for eligible participants over age 50. The Company believes that providing a vehicle for tax-preferred retirement savings through the 401(k) plan adds to the overall desirability of its executive compensation package and further incents the Company’s employees, including the NEOs, in accordance with the Company’s compensation policies. For 2013, the Company approved payment of matching contributions to each eligible participant’s plan account in an amount equal to 50% of each participant’s deferrals for 2013, up to a maximum of 3% of the participant’s eligible compensation during 2013.

On February 27, 2013, our Board adopted the stock ownership threshold levels set forth in the table below:

Under the terms of the Company’s stock ownership guidelines, executive officers must hold 100% of all shares received from the vesting, delivery or exercise of equity awards granted under the Company’s equity award plans (net of shares used to pay the exercise price of options or purchase price of other awards, all applicable withholding taxes and all applicable transaction costs) until the executive officer’s qualifying holdings meet or exceed the applicable salary multiple. In addition, absent a waiver by the Company or undue hardship, executive officers may not dispose of share holdings (by sale or otherwise) if the disposition would result in qualifying holdings falling below the applicable salary multiple. “Qualifying holdings” generally refer to shares of Class A Common Stock (i) held by the executive officer or certain trusts or entities controlled by the executive officer, (ii) held by a 401(k) or other qualified pension or profit-sharing plan for the executive officer’s benefit and (iii) underlying vested restricted stock units. All of our NEOs are in compliance with the stock ownership guidelines.

In addition, the Company has also implemented a prohibition applicable to all of our directors and employees, including our executive officers, from engaging in short sales, purchasing or pledging shares on margin (other than for “cashless exercise” of stock options) and, absent highly unusual circumstances, all such employees and directors are prohibited from entering into any hedging or similar transactions with respect to securities.

In February 2013, the Compensation Committee established a subcommittee comprised of our Chief Executive Officer in his capacity as a member of the Board, as sole member, with limited authority to grant a certain number of restricted stock awards to employees of the Company who are not participants in the 2013 LTIP, and subject to certain other limitations and conditions. In accordance with this delegated authority, for fiscal year 2013, the subcommittee granted a total of 35,286 shares of restricted stock.

Effective February 25, 2012, the Company and California Lyon entered into employment agreements with General William Lyon and William H. Lyon, pursuant to which General Lyon will continue to serve as the Chairman of the Board of Directors and Chief Executive Officer of the Company and California Lyon, and William H. Lyon will continue to serve as President and Chief Operating Officer of the Company and California Lyon. On March 6, 2013, the Company’s Board established the new role of Executive Chairman for General Lyon. General Lyon will no longer serve as Chief Executive Officer of the Company but will continue to serve as Chairman of the Board. On the same date, the Company’s Board appointed William H. Lyon to serve as Chief Executive Officer of the Company.

The term of each employment agreement expires on December 31, 2014, subject to earlier termination as provided in the employment agreement. Under the employment agreements, General Lyon and William H. Lyon are entitled to annual base salaries of $1 million and $500,000 per year, respectively. Effective as of March 11, 2013, the Board increased Mr. William H. Lyon’s annual base salary to $600,000 per year.

Under these employment agreements, commencing with fiscal year 2013, bonuses will be payable under the Company’s bonus program for senior executives, in the sole discretion of the Company’s Compensation Committee. The payment of a portion of the bonuses may be deferred as provided in the terms of the bonus program.

In the event of the termination of the executive’s employment by California Lyon without “cause” as defined in each employment agreement or the termination by the executive of his employment for “good reason” as defined in each employment agreement, the executive is entitled to receive (i) a payment equal to the greater of 18 months of salary or the amount of salary otherwise payable for the remainder of the scheduled term of employment; (ii) any deferred and unpaid bonuses; and (iii) the amount of bonus that the executive would have earned in the year of termination. In addition, the executive is entitled to receive reimbursement for certain health benefits coverage through the earlier of the end of the originally scheduled term of employment (but not less than 6 months after the date of termination) and the date when the executive becomes covered under another group health or disability plan.

Under the employment agreements, “good reason” will be deemed to have occurred, among other things, (i) if California Lyon breaches the employment agreement (including a material reduction in compensation, title, positions, responsibilities, authority or duties), (ii) if the Company or California Lyon ceases to acquire or develop land or materially changes its business, or invests or engages in new businesses that compete with Lyon Management Group, Inc. and/or Lyon Capital Ventures, LLC, (iii) upon the relocation (without the executive’s consent) of the executive’s or California Lyon’s principal place of business outside of Orange County, California; or (iv) upon the occurrence of a change of control, as defined in the employment agreement.

In the event of a termination of the executive’s employment due to death or disability, the executive (or his estate) will be entitled to receive (i) a payment equal to the amount of salary otherwise payable for the remainder of the scheduled term of employment; (ii) any deferred and unpaid bonuses; and (iii) continued health insurance coverage for a specified period of time following termination.

On October 10, 2012, our Board approved, effective as of September 1, 2012, an employment agreement between California Lyon and Mr. Zaist and employment agreements between California Lyon and each of Messrs. Severn, Doyle and Robinson, or the 2012 Employment Agreements. For Mr. Zaist, the 2012 Employment Agreement was amended effective as of March 6, 2013 to reflect his change in position to President and Chief Operating Officer, base salary increase and that his annual cash bonus target would be no less than 100% of his annual base salary (as compared to no less than 125% of base salary as provided in the 2012 Employment Agreement). For Messrs. Severn, Doyle and Robinson, the 2012 Employment Agreement was replaced and superseded by a new form of employment agreement effective as of April 1, 2013, which reflected increases to base salary, as applicable, replaced certain incentive award provisions with references to the Compensation Committee’s establishment of any such programs, and certain other nonmaterial changes. The new agreements, or amended agreements, as applicable, for each of Messrs. Zaist, Severn, Doyle and Robinson are individually referred to as an “Employment Agreement” and collectively referred to as the “Employment Agreements.”

The term of Mr. Zaist’s Employment Agreement will expire on August 31, 2015, subject to earlier termination as provided in the agreement. The term of the Employment Agreements for each of Messrs. Severn, Doyle and Robinson are for an initial period expiring March 31, 2014, with automatic one-year renewal periods annually thereafter unless either party provides the other with written notice of nonrenewal at least 60 days prior to the expiration of the term.

Under the Employment Agreements, Messrs. Zaist, Severn, Doyle and Robinson are entitled to annual base salaries of $500,000, $250,000, $300,000 and $225,000, respectively. Each executive’s annual base salary is subject to increase (but not decrease) from time to time, in the sole discretion of the Compensation Committee.

Messrs. Zaist, Severn, Doyle and Robinson each had the right to earn a cash bonus during the 2013 fiscal year with a target amount equal to 100%, 70%, 100% and 67% of base salary, respectively, payable in part in 2014 and 2015, as provided for in the employment agreements and the terms of the 2013 annual cash incentive program. Future target bonus levels will be established by the Compensation Committee in its sole discretion and, in the case of Mr. Zaist, will not be less than 100% of Mr. Zaist’s annual base salary.

In the event of a termination of the executive’s employment due to death or disability, by the Company for “cause” or by the executive without “good reason,” the executive (or his estate) will be entitled to receive no benefits other than accrued but unpaid base salary and vacation benefits through the date of termination.

Under the Employment Agreements, in the event of the termination of the executive’s employment by the Company without “cause,” as defined in the employment agreements, or the termination by the executive of his employment for “good reason,” as defined below, the executive is entitled to receive (i) a payment equal to the product of (A) 1.5, in the case of Mr. Zaist, and 1.0, in the case of Messrs. Severn, Doyle and Robinson, multiplied by (B) the sum of the executive’s annual salary plus target cash bonus at the time of his termination of employment; (ii) any deferred and unpaid bonuses; (iii) in the case of Messrs. Zaist and Robinson, accelerated vesting in full of all restricted stock awards and options granted under the 2012 Plan and, in the case of each of Messrs. Severn and Doyle, if such termination occurs on or within 12 months following a change in control as defined in the employment agreement (and the executive’s respective equity awards are not assumed by the successor corporation), accelerated vesting in full of all restricted stock awards and options granted under the 2012 Plan; (iv) reimbursement for certain health benefits coverage through the earlier of (A) the end of the six-month period (twelve-month period in the case of Mr. Zaist) beginning on the first day of the month following the month of the executive’s termination of employment and (B) the date when the executive becomes covered under another employer’s group health or disability plan; and (v) in the case of Mr. Zaist, a release of claims from the Company, the Company and their affiliates.

Each executive’s receipt of the foregoing severance benefits is conditioned on his execution of a general release in favor of the Company and his compliance with certain noncompetition and nonsolicitation obligations. The Employment Agreements also provide that the executives will be indemnified to the maximum extent permitted by applicable law.

Under the Employment Agreements, “good reason” generally includes (i) a material breach of the employment agreement by the Company (including a material reduction in authority, duties or base salary), (ii) a relocation of the executive’s or the Company’s principal place of business outside a specified area, or (iii) the occurrence of a “change in control”, as defined in the employment agreement. In addition, under Mr. Zaist’s New Employment Agreement, “good reason” also includes certain changes with respect to Mr. Zaist’s reporting relationship within the Company or in the senior management structure of the Company.

Generally, Section 162(m) of the Code disallows a tax deduction to any publicly held corporation for any individual remuneration in excess of $1.0 million paid in any taxable year to its chief executive officer and each of its other NEOs, other than its chief financial officer. However, remuneration in excess of $1.0 million may be deducted if, among other things, it qualifies as “performance-based compensation” within the meaning of the Code. Because the Company was not subject to Section 162(m) of the Code in 2013, it was not a factor in the Company’s 2013 compensation decisions.

Section 280G of the Code disallows a tax deduction with respect to excess parachute payments to certain executives of companies that undergo a change in control. In addition, Section 4999 of the Code imposes a 20%

excise tax on the individual with respect to the excess parachute payment. Parachute payments are those amounts of compensation linked to or triggered by a change in control and may include, but are not limited to, bonus payments, severance payments, certain fringe benefits, and payments and acceleration of vesting from long-term incentive plans including stock options and other equity-based compensation. Excess parachute payments are parachute payments that exceed a threshold determined under Section 280G of the Code based on the executive’s prior compensation. In approving certain compensation arrangements for the NEOs in the future, the Compensation Committee may consider all elements of the cost to the Company of providing such compensation, including the potential impact of Section 280G of the Code. However, the Compensation Committee may, in its judgment, authorize compensation arrangements that could give rise to loss of deductibility under Section 280G of the Code and the imposition of excise taxes under Section 4999 of the Code when it believes that such arrangements are appropriate to attract and retain executive talent.

Section 409A of the Code requires that “nonqualified deferred compensation” be deferred and paid under plans or arrangements that satisfy the requirements of the statute with respect to the timing of deferral elections, timing of payments and certain other matters. Failure to satisfy these requirements can expose employees and other service providers to accelerated income tax liabilities, penalty taxes and interest on their vested compensation under such plans. Accordingly, as a general matter, it is the Company’s intention to design and administer its compensation and benefits plans and arrangements for all of its employees and other service providers, including the NEOs, so that they are either exempt from, or satisfy the requirements of, Section 409A of the Code.

The following table sets forth certain information with respect to compensation for the 2013, 2012 and 2011 fiscal years earned by, awarded to or paid to the NEOs.

The following table sets forth summary information regarding all grants of plan-based awards made to our NEOs for the year ended December 31, 2013. In connection with our initial public offering in May 2013, we effected a 1-for-8.25 reverse stock split with respect to each share of our Class A Common Stock and Class B Common Stock, and all of our previously outstanding shares of Class D Common Stock, including shares underlying outstanding equity awards, Class C Common Stock and Convertible Preferred Stock were converted into shares of Class A Common Stock on a one-for-one basis and as automatically adjusted for the reverse stock split. We refer to such reverse stock split and share conversion herein as the Common Stock Recapitalization, and all share amounts and class references herein, including the table below, give effect to the Common Stock Recapitalization, and thus are on a post-split and post-conversion basis.

The following table sets forth summary information regarding the outstanding equity awards held by our NEOs, as applicable, at December 31, 2013. Amounts shown in the table below give effect to the Common Stock Recapitalization.

The following table provides the vesting schedule with respect to each of the awards set forth in the table above.

Officers serve at the discretion of the Board of Directors, subject to rights, if any, under contracts of employment. See “Employment Contracts” on page 19. Biographical information for General Lyon, Mr. Cable and Mr. William H. Lyon is provided above. See “Information Regarding the Directors of William Lyon Homes” on page 4.

D~~OUGLAS~~ ~~F. BAUER~~, Executive Vice President and Northern California Division President, joined the Company in 1999 when it acquired substantially all of the assets of the former William Lyon Homes, where Mr. Bauer had served as Vice President — Finance and Chief Financial Officer and Northern California Division President since his hire in January 1989. Effective on July 1, 2005, Mr. Bauer was appointed Executive Vice President. He continues to serve in the position of Northern California Division President. Prior experience includes seven years at Security Pacific National Bank in Los Angeles, California in various financial positions. Mr. Bauer has more than 20 years experience in the real estate development and homebuilding industry.

M~~ARY~~ ~~J. CONNELLY~~, Senior Vice President and Nevada Division President, joined The Presley Companies in May 1995, after eight years’ association with Gateway Development, six of which were served as Managing Partner in Nevada. Ms. Connelly was Vice President — Finance for the Company’s San Diego Division from 1985 to 1987, and she has more than 20 years experience in the real estate development and homebuilding industry.

~~W. THOMAS~~ H~~ICKCOX~~, Senior Vice President and Arizona Division President, joined the Company in May 2000. Mr. Hickcox was previously President of Continental Homes in Phoenix, Arizona, with 16 years of service at that company. Mr. Hickcox has more than 20 years experience in the real estate development and homebuilding industry.

T~~HOMAS~~ ~~J. MITCHELL~~, Senior Vice President and Southern California Division President, joined the Company in 1999 when it acquired substantially all of the assets of the former William Lyon Homes, where Mr. Mitchell had served as a Project Manager, Vice President, and Division President since his hire in

~~December 1988. Mr. Mitchell has more than 20 years experience in the real estate development~~Options Exercised and ~~homebuilding industry.~~

L~~ARRY~~ ~~I. SMITH~~, Senior Vice President and San Diego Division President, joined The Presley Companies in May 1995 and has served the Company in that capacity since November 1999, after six years as Vice President and Southern California Division Manager of Coleman Homes, Inc. Previous experience includes ten years in sales and marketing executive positions and consulting activities with southern California real estate firms. Mr. Smith has more than 20 years experience in the real estate development and homebuilding industry.

M~~ICHAEL~~ ~~D. GRUBBS~~, Senior Vice President and Chief Financial Officer, joined the Company in 1999 when it acquired substantially all of the assets of the former William Lyon Homes, where Mr. Grubbs had served as Vice President and Corporate Controller after his hire in December 1992. Mr. Grubbs has more than 20 years experience in residential real estate and homebuilding finance.

R~~ICHARD~~ ~~S. ROBINSON~~, Senior Vice President — Finance, joined the Company in 1999 when it acquired substantially all of the assets of the former William Lyon Homes, where Mr. Robinson had served since May 1997 as Senior Vice President, and as Vice President — Treasurer and other administrative positions at The William Lyon Company or one of its subsidiaries or affiliates since his hire in June 1979. His experience in residential real estate development and homebuilding finance totals more than 30 years.

C~~YNTHIA~~ ~~E. HARDGRAVE~~, Vice President — Tax and Internal Audit, joined the Company in 1999 when it acquired substantially all of the assets of the former William Lyon Homes, where Ms. Hardgrave had served in various tax management positions since her hire in July 1989. Ms. Hardgrave has more than 20 years experience in real estate tax and audit.

~~W. DOUGLASS~~ H~~ARRIS~~, Vice President and Corporate Controller joined The Presley Companies in June 1992 and has served the Company in that capacity since November 1999. Mr. Harris has served as the Corporate Secretary of the Company since October 2002. Previously, Mr. Harris spent seven years with Shapell Industries, Inc., another major California homebuilder, as its Vice President and Corporate Controller. Mr. Harris has been involved with the real estate development and homebuilding industry for more than 30 years.

The following table summarizes the ~~annual~~option exercises and ~~long-term compensation during 2004~~vesting of restricted stock awards for our NEOs, as applicable, for the ~~Company’s Chief Executive Officer and~~year ended December 31, 2013. The vesting of stock awards does not indicate the ~~four additional most highly compensated executive officers whose annual salaries and bonuses exceeded $100,000~~sale of stock by an NEO.

The NEOs did not participate in ~~total~~or have account balances in qualified or nonqualified defined benefit plans sponsored by the Company during the fiscal year ended December 31, ~~2004 (collectively,~~2013.

The NEOs did not participate in or have account balances in nonqualified defined contribution plans or other nonqualified deferred compensation plans maintained by the ~~“Named Officers”~~Company during the fiscal year ended December 31, 2013.

The following table summarizes the potential payments to our NEOs upon a “qualifying termination” of employment (a termination by us without cause or the executive’s resignation for good reason) or upon the executive’s termination of employment as a result of death or disability. As described above in “-Employment Agreements and Severance Benefits,” a resignation by the executive in connection with a “change of control” would be deemed a resignation for good reason. In the event an NEO is terminated for cause, by the NEO for any reason other than good reason, or, in the case of Messrs. Severn, Zaist and Doyle, due to death or disability, such NEO is not entitled to any severance payments or benefits. The amounts shown assume that such termination was effective as of December 31, 2013, the last business day of fiscal year 2013, and are only estimates of the amounts that would be paid to such NEOs. The actual amounts to be paid can be determined only at the time of such termination of employment.

Director Compensation Program. Our Executive Chairman and our Chief Executive Officer do not receive additional compensation for their service as directors. The Compensation Committee is responsible for the periodic review of fees and benefits paid to non-employee directors and for submitting any recommended changes to the Board. Our non-employee directors receive an annual cash retainer, payable in equal quarterly installments, as well as an equity award retainer, consisting of restricted shares of our Class A Common Stock vesting in equal quarterly installments following the grant date. The equity portion of the annual retainer for Messrs. Barr and Redleaf is paid in cash. The amount of the annual cash retainer for 2013 was $50,000 per year, and the amount of the annual cash retainer approved for 2014 is $50,000 per year. The grant date fair value of the annual equity retainer for 2013 was $75,000, and the grant date fair value of the annual equity retainer approved for 2014 is $90,000. Mr. Hunt, as the lead independent director, receives an additional annual cash retainer and annual equity award retainer, on the same payment and vesting schedule as the other retainers. In 2013, the amount of this additional cash and equity retainer were $50,000 and $25,000, respectively, and the amounts of such additional cash and equity retainers approved for 2014 are $50,000 and $25,000, respectively. For 2013, our non-employee directors also received a $1,500 fee for each Board and committee meeting attended in person and $1,000 for each meeting attended via teleconference. In 2014, upon recommendation of the Compensation Committee, the Board eliminated the per meeting fees as an element of non-employee director compensation. In addition, for 2013, the chairperson of the Audit Committee receives a fee of $20,000 per year, payable $5,000 per calendar quarter, to serve in such capacity, the chairperson of the Compensation Committee receives a fee of $15,000 per year, payable $3,750 per calendar quarter, to serve in such capacity, the chairperson of the Nominating and Corporate Governance Committee receives a fee of $10,000 per year, payable $2,500 per calendar quarter, to serve in such capacity, and other members of such committees receive a fee of $5,000 per year, payable $1,250 per calendar quarter, per committee for service on such committees, and such amounts remain unchanged as approved for 2014. Members of the Corporate Finance Committee receive an annual equity award retainer, consisting of restricted shares of our Class A Common Stock vesting in equal quarterly installments following the grant date. The grant date fair value of the annual equity award to members of the Corporate Finance Committee was $25,000 for 2013, and for 2014 was reduced to $15,000.

For 2013, the Board permitted each non-employee director, other than Messrs. Barr and Redleaf, to elect to receive his or her annual cash retainer in the form of restricted stock pursuant to each director’s election. Messrs. Hunt, Ammerman and Niemann and Ms. Carlson Schell each elected to receive their entire annual retainer, including the cash portion, in restricted shares. Messrs. Barr and Redleaf received their entire 2013 annual retainer in cash. For 2014, the Board permitted each non-employee director, other than Messrs. Barr and Redleaf, to elect to receive his or her annual cash fees, including the annual retainer and fees for committee service, in the form of restricted stock pursuant to each director’s election, so long as the election was for all of such cash fees. Messrs. Ammerman and Niemann and Ms. Carlson Schell each elected to receive their entire cash fees in restricted shares, and Mr. Hunt elected to receive his cash fees in cash. In connection with the compensation programs and elections described above, on March 1, 2013, the Company granted 8,913 restricted shares of our

Class A Common Stock to each of Messrs. Hunt, Ammerman and Niemann and Ms. Carlson Schell, which represents for each director a $75,000 value with respect to the equity award retainer and $50,000 value for the annual cash retainer. On the same date, the Company granted Mr. Hunt, the lead independent director, an additional 5,348 shares, which represents the value of his additional $50,000 cash retainer and $25,000 in equity compensation as lead independent director. Each of the restricted stock awards granted to the non-employee directors vested on a quarterly basis and vested in full on March 1, 2014. Each member of the Corporate Finance Committee was granted a restricted stock award on April 4, 2013, with a $25,000 value, which vested on a quarterly basis and vested in full on March 1, 2014.

For 2014, and in connection with the compensation programs and elections described above, the Company granted the following restricted shares of our Class A Common Stock to each of our non-employee directors, other than Messrs. Barr and Redleaf: 6,383 shares to Mr. Ammerman, 6,211 shares to Mr. Niemann, 3,968 shares to Mr. Hunt, and 5,866 shares to Ms. Carlson Schell, which represents the entire annual fee amount for all Board and committee service for Messrs. Ammerman and Niemann and Ms. Carlson Schell and the annual equity retainers for Board and lead independent director service for Mr. Hunt, and in each case vesting in equal quarterly installments and to vest in full on March 1, 2015.

Director Stock Ownership Guidelines. Our Board has adopted stock ownership guidelines for ournon-employee directors, requiring such directors to hold stock with a value equal to two times the director’s annual retainer value (both cash and equity award retainers). Under the terms of the Company’s stock ownership guidelines, directors must hold 100% of all shares received from the vesting, delivery or exercise of equity awards granted under the Company’s equity award plans (net of shares used to pay the exercise price of options or purchase price of other awards, all applicable withholding taxes and all applicable transaction costs) until the directors’ qualifying holdings meet or exceed the applicable retainer multiple. In addition, absent a waiver by the Company or undue hardship, directors may not dispose of share holdings (by sale or otherwise) if the disposition would result in qualifying holdings falling below the applicable retainer multiple. “Qualifying holdings” generally refer to shares of Class A Common Stock (i) held by the director or certain trusts or entities controlled by the director, (ii) held by a 401(k) or other qualified pension or profit-sharing plan for the director’s benefit and (iii) underlying vested restricted stock units. Each of our non-employee directors is in compliance with the Company’s stock ownership guidelines.

2013 Director Compensation. The following table sets forth information concerning the compensation of the directors during the fiscal year ended December 31, 2013.

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement for the 2014 annual meeting of stockholders and the Annual Report on Form10-K for the fiscal year ended December 31, 2013.

The following table summarizes information about our equity securities that may be issued upon the exercise of options, warrants and rights under all our equity compensation plans, as of December 31, 2013. The non-compensatory warrant to purchase 1,907,550 shares of the Company’s Class B Common Stock issued in connection with the Plan is not included in the table below. For a description of the non-compensatory warrant, please see “Certain Relationships and Related Party Transactions-Amendment to Warrant.” All of the information in the table below gives effect to the Common Stock Recapitalization described elsewhere in this proxy statement.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the“Dodd-Frank Act”) enables our stockholders to vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the SEC’s rules.

We are asking our stockholders to provide advisory approval of the compensation of our named executive officers for the fiscal year ended December 31, 2013 (“NEOs”), as disclosed in this proxy statement. In considering their vote, we encourage stockholders to carefully review our compensation policies and decisions regarding our NEOs as presented in the “Compensation Discussion and Analysis” section of this proxy statement and the tabular, and accompanying narrative, disclosure on pages 24 to 40.

Our executive compensation programs are designed to enable us to attract, motivate and retain highly qualified executive talent, who are critical to our success. These programs link compensation to the achievement ofpre-established corporate financial performance objectives and provide long-term incentive compensation that focuses our executives’ efforts on building stockholder value by aligning their interests with those of our stockholders. We have implemented several important governance initiatives related to compensation practices, and as illustrated by the financial and operating results described in the “Compensation Discussion and Analysis” section of this proxy statement, 2013 represented a hallmark year for the Company.

Our Board believes that the information provided above and within the “Executive Compensation” section of this proxy statement demonstrates that our executive compensation program was designed appropriately and is working to ensure that management’s interests are aligned with our stockholders’ interests to support long-term value creation.

Our Board has recommended every “one year” as the frequency of an advisory vote on the compensation of our named executive officers. In accordance with this recommendation and Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and as a matter of good governance, the following resolution is submitted for a stockholder vote at the Annual Meeting:

RESOLVED, that the stockholders of William Lyon Homes approve, on an advisory basis, the compensation of William Lyon Homes’ named executive officers, as disclosed in the Compensation Discussion and Analysis, compensation tables and narrative discussion set forth in this proxy statement.

The say-on-pay vote is advisory, and therefore not binding on the Company, the Compensation Committee or our Board. Although non-binding, the vote will provide information to our Compensation Committee regarding investor sentiment about our executive compensation philosophy, policies and practices, which the Compensation Committee will be able to consider when determining executive compensation for the years to come.

The Dodd-Frank Act also enables our stockholders to indicate how frequently they believe we should seek an advisory vote on the compensation of our NEOs. We are seeking an advisory, non-binding determination from our stockholders as to the frequency with which stockholders would have an opportunity to provide an advisory approval of the executive compensation of our NEOs. We are providing stockholders the option of selecting a frequency of one, two or three years, or abstaining.

While we will continue to monitor developments in this area, the Board currently plans to seek an advisory vote on executive compensation every year. We believe that this frequency is appropriate because it will enable our stockholders to vote, on an advisory basis, on the most recent executive compensation information that is presented in our proxy statement, leading to a more meaningful and coherent communication between the Company and our stockholders on the compensation of our NEOs.

The Board’s determination was further based on the premise that this recommendation could be modified in future years if it becomes apparent that an annual frequency vote is not meaningful, is burdensome or is more frequent than recommended by best corporate governance practices.

Based on the factors discussed, the Board determined to recommend that future say-on-pay votes occur every year until the next advisory vote on the frequency of future say-on-pay votes. Stockholders are not being asked to approve or disapprove the Board’s recommendation, but rather to indicate their choice among the following frequency options: one year, two years or three years, or to abstain from voting.

This vote is advisory, and therefore not binding on the Company, the Compensation Committee or the Board.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS SELECT EVERY1 YEAR ON THE FREQUENCY OF FUTURE SAY-ON-PAY VOTES.

Policies and Procedures for Review, Approval or Ratification of Transactions with Related Persons

Our Board has adopted a written statement of policy for the evaluation of and the approval, disapproval and monitoring of transactions involving us and a “related party.” For purposes of this policy, a “related party” includes our executive officers, directors and director nominees or their immediate family members, or stockholders owning five percent or more of our voting securities.

In connection with the review and approval or ratification of a related party transaction:

We have entered into employment agreements with certain of our executive officers. For more information regarding these agreements, see “Executive Compensation—Employment Agreements and Severance Benefits.”

We have entered into indemnification agreements with certain of our executive officers and each of our directors pursuant to which the Company has agreed to indemnify such executive officers and directors against liability incurred by them by reason of their services as an executive officer or director to the fullest extent allowable under applicable law. We also provide liability insurance for each director and officer for certain losses arising from claims or charges made against them while acting in their capacities as our directors or officers.

We describe below transactions and series of similar transactions that have occurred since the beginning of the 2013 fiscal year to which we were a party or will be a party in which:

Presley CMR, Inc., a California corporation (“Presley CMR”), and wholly owned subsidiary of William Lyon Homes, Inc., a California corporation and wholly-owned subsidiary of the Company (“California Lyon”), entered into an Aircraft Purchase and Sale Agreement (the “PSA”), with an affiliate of General William Lyon, our Executive Chairman and Chairman of the Board, to sell the aircraft, owned by the Company. The PSA provides for an aggregate purchase price for the aircraft of $8.3 million (which value was the appraised fair market value of the aircraft), which consists of: (i) cash in the amount of $2.1 million which was paid at closing and (ii) a promissory note from the affiliate in the amount of $6.2 million, which is included in receivables in the accompanying consolidated balance sheet. The closing of this sale occurred on September 9, 2009. The note is secured by the aircraft. As part of the Company’s fresh start accounting, the note was adjusted to its fair value of $5.2 million. The discount on the fresh start adjustment is amortized over the remaining life of the note. The note requires semiannual interest payments to California Lyon of approximately $132,000. The note is due in September 2016.

In connection with the Plan, the Company issued a warrant (the “Class B Warrant”), to Lyon Shareholder 2012, LLC (“Lyon LLC”), an entity controlled by William H. Lyon, one of the Company’s directors and the Chief Executive Officer of the Company. Pursuant to the Class B Warrant, Lyon LLC may purchase up to 1,907,550 shares of our Class B Common Stock at $17.08 per share (after giving effect to the Common Stock Recapitalization described elsewhere in this proxy statement). The original term of the Class B Warrant was five years, and it would expire on February 24, 2017. In connection with the adoption of the Certificate of Incorporation in May 2013, the Class B Warrant was amended to extend the term to 10 years, and the Class B Warrant will now expire on February 24, 2022.

In October 2013, California Lyon acquired certain finished and unfinished lots at a master planned community located in Aurora, Colorado, for a cash purchase price of approximately $20.0 million, from an entity managed by an affiliate of Paulson. WLH Recovery Acquisition LLC, which is affiliated with, and managed by affiliates of, Paulson, holds over 5% of our outstanding Class A common stock. California Lyon participated in a competitive bidding process for the lots and we believe that the acquisition was on terms no less favorable than it would have agreed to with unrelated parties. The transaction was approved by the Audit Committee of our Board and by our full Board, with the exception of Mr. Barr, who recused himself from the vote because of his affiliation with Paulson. Mr. Barr currently serves as Portfolio Manager for the Paulson Real Estate Funds, which are affiliates of Paulson, where he is responsible for all aspects of the real estate private equity business. Mr. Barr is also a partner in Paulson, which he joined in 2008, and a member of our Board.

William H. Lyon, one of the Company’s directors and the Chief Executive Officer of the Company, is the son of General William Lyon. General William Lyon is the Company’s Chairman of the Board and the Executive Chairman.

For a description of the independence determinations of the Board, see the section herein entitled “Director Independence.”

Section 16(a) of the Exchange Act requires our executive officers, directors and persons who own more than ten percent of a registered class of our equity securities to file reports of ownership and changes in ownership with the SEC and the NYSE. Executive officers, directors and greater than ten-percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.

Based solely on our review of the copies of such forms furnished to us and the written representations from certain of the reporting persons that no other reports were required, we believe that during the fiscal year ended December 31, 2013, all executive officers, directors and greater than ten-percent beneficial owners complied with the reporting requirements of Section 16(a).

Proposals Pursuant to Rule 14a-8. Pursuant to Rule 14a-8 under the Exchange Act, stockholders may present proper proposals for inclusion in the proxy statement and for consideration at our next annual meeting of stockholders. To be eligible for inclusion in the 2015 proxy statement, your proposal must be received by us no later than December 16, 2014, and must otherwise comply with Rule 14a-8. While our Board will consider stockholder proposals, we reserve the right to omit from the proxy statement stockholder proposals that we are not required to include under the Exchange Act, including Rule 14a-8.

Proposals and Nominations Pursuant to Our Bylaws. Under our bylaws, in order to nominate a director or bring any other business before the stockholders at the 2015 annual meeting that will not be included in our proxy statement, you must notify us in writing and such notice must be received by us no earlier than January 27, 2015 and no later than February 26, 2015. For proposals not made in accordance with Rule 14a-8, you must comply with specific procedures set forth in our bylaws and the nomination or proposal must contain the specific information required by our bylaws. You may write to our Corporate Secretary at our principal executive offices, 4695 MacArthur Court, 8^th Floor, Newport Beach, California 92660, to deliver the notices discussed above and to request a copy of the relevant bylaw provisions regarding the requirements for making stockholder proposals and nominating director candidates pursuant to the bylaws.

The SEC has adopted rules that permit companies and intermediaries (such as banks and brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.

This year, a number of banks and brokers with account holders who are our stockholders will be householding our proxy materials. A single proxy statement will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your bank or broker that it will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement and annual report, please notify your bank or broker, direct your written request to William Lyon Homes, 4695 MacArthur Court, 8^th Floor, Newport Beach, California 92660 Attn: Investor Relations, or contact Investor Relations by telephone at 310-622-8223. Stockholders who currently receive multiple copies of the proxy statement at their address and would like to request householding of their communications should contact their bank or broker.

Notwithstanding anything to the contrary set forth in any of our previous filings under the Securities Act of 1933, as amended, or the Exchange Act, which might incorporate future filings made by us under those statutes, neither the preceding Compensation Committee Report nor the Audit Committee Report will be incorporated by reference into any of those prior filings, nor will any such report be incorporated by reference into any future filings made by us under those statutes. In addition, information on our website, other than our proxy statement, notice and form of proxy, is not part of the proxy soliciting material and is not incorporated herein by reference.

WILLIAM LYON HOMES

The Board of Directors recommends you vote FOR the following:

For All

Withhold All

For All Except

To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below.

Election of eight directors to serve for a term of office expiring at the 2015 annual meeting of stockholders and until their successors are duly elected and qualified.

Nominees:

01)

Douglas K. Ammerman

05)

William H. Lyon

02)

Michael Barr

06)

Matthew R. Niemann

03)

Gary H. Hunt

07)

Nathaniel Redleaf

04)

General William Lyon

08)

Lynn Carlson Schell

The Board of Directors recommends you vote FOR proposals 2 and 3.

For

Against

Abstain

Ratification of the selection of KPMG LLP as the independent registered public accountants of William Lyon Homes for the fiscal year ending December 31, 2014.

Advisory (non-binding) vote to approve the compensation of our named executive officers, as described in the proxy materials.

The Board of Directors recommends you vote 1 YEAR on the following proposal:

1 Year

2 Years

3 Years

Abstain

Advisory (non-binding) vote to approve the frequency of future votes on executive compensation.

NOTE:Such other business as may properly come before the meeting or any adjournment thereof.

Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.

~~Annual Compensation~~

~~Long-Term~~
~~Compensation~~

~~Awards~~

~~Name and Principal Position~~

~~Year~~

~~Salary($)(1)~~

~~Bonus Paid in~~
~~Specified Year~~
~~But Earned in~~
~~Earlier Years~~
~~($)(1),(2),(3),(4),(5)~~

~~Bonus Earned~~
~~During Specified~~
~~Year But Payable~~

~~in Future~~
~~Years($)(3),(4),(5)~~

~~Securities~~
~~Underlying~~
~~Options(#)~~

~~All Other~~
~~Compensation~~
~~($)(6)~~

~~General William Lyon~~

~~Chairman of the Board and Chief Executive Officer~~

~~2004~~

~~2003~~
~~2002~~

~~733,333~~

~~600,000~~
~~495,000~~

~~4,023,604~~
~~2,368,429~~
~~1,985,408~~

~~10,176,870~~
~~4,535,192~~
~~2,488,838~~

0
0
0

~~Wade H. Cable~~

~~Director, President and Chief Operating Officer~~

~~2004~~
~~2003~~
~~2002~~

~~500,000~~
~~500,000~~
~~424,330~~

~~4,023,604~~
~~2,368,429~~
~~2,294,158~~

~~10,176,870~~
~~4,535,192~~
~~2,488,838~~

0
0
0

~~6,200~~
~~6,000~~
~~5,100~~

~~Douglas F. Bauer~~

~~Executive Vice President and Northern California Division President~~

~~2004~~
~~2003~~
~~2002~~

~~225,000~~
~~225,000~~
~~206,000~~

~~717,018~~
~~483,619~~
~~484,970~~

~~3,273,060~~
~~789,357~~
~~500,000~~

0
0
0

~~6,200~~
~~6,000~~
~~5,100~~

~~Thomas J. Mitchell~~

~~Senior Vice President and Southern California Division President~~

~~2004~~
~~2003~~
~~2002~~

~~225,000~~
~~225,000~~
~~206,000~~

~~1,481,180~~
~~968,315~~
~~647,259~~

~~2,667,000~~
~~1,621,379~~
~~1,060,582~~

0
0
0

~~6,200~~
~~6,000~~
~~5,100~~

~~Mary J. Connelly~~

~~Senior Vice President and Nevada Division President~~

~~2004~~
~~2003~~
~~2002~~

~~225,000~~
~~225,000~~
~~200,000~~

~~820,887~~
~~482,333~~
~~461,627~~

~~1,857,360~~
~~927,849~~
~~500,000~~

0
0
0

~~6,200~~
~~6,000~~
~~5,100~~

~~(1)~~

Includes amounts which the executive would have been entitled to be paid, but which at the election of the executive were deferred by payment into the Company’s 401(k) plan and deferred compensation plan. Does not include perquisites and other personal benefits, securities or property received by the executive unless the aggregate amount of such compensation is greater than the lesser of $50,000 or 10 percent of the total annual salary and bonus reported for the executive.

~~(2)~~

Represents amounts paid in 2004, 2003 or 2002, respectively, under the Company’s then existing executive bonus plan or employment agreement with the executive, but which were earned prior to the year of payment.

~~(3)~~

The 2004 Cash Bonus Plan (the “2004 Plan”) provides that the Chief Executive Officer (“CEO”), the Chief Operating Officer (“COO”) and the Chief Financial Officer (“CFO”) are eligible to receive bonuses based upon specified percentages of pre-tax, pre-bonus income. Division presidents are eligible to receive bonuses based upon specified percentages of their respective division pre-tax, pre-bonus income. All other participants are eligible to receive bonuses based upon specified percentages of a bonus pool determined as a specified percentage of pre-tax, pre-bonus income. Awards are paid over two years, with 75% paid following the determination of bonus awards, and 25% paid one year later. The deferred amounts would be forfeited in the event of termination for any reason except retirement, death or disability.

~~(4)~~

The 2003 Cash Bonus Plan (the “2003 Plan”) provides that the CEO, COO and CFO are eligible to receive bonuses based upon specified percentages of pre-tax, pre-bonus income. Division presidents are eligible to receive bonuses based upon specified percentages of their respective division pre-tax, pre-bonus income. All other participants are eligible to receive bonuses based upon specified percentages of a bonus pool determined as a specified percentage of pre-tax, pre-bonus income. Awards are paid over two years, with

75% paid following the determination of bonus awards, and 25% paid one year later. The deferred amounts would be forfeited in the event of termination for any reason except retirement, death or disability.

~~(5)~~

The 2002 Cash Bonus Plan (the “2002 Plan”) provides that the CEO, COO and CFO are eligible to receive bonuses based upon specified percentages of pre-tax, pre-bonus income. Division presidents are eligible to receive bonuses based upon specified percentages of their respective division pre-tax, pre-bonus income. All other participants are eligible to receive bonuses based upon specified percentages of a bonus pool determined as a specified percentage of pre-tax, pre-bonus income. Awards are paid over two years, with 75% paid following the determination of bonus awards, and 25% paid one year later. The deferred amounts would be forfeited in the event of termination for any reason except retirement, death or disability.

~~(6)~~

~~Represents matching contributions made by the Company into each executive’s 401(k) plan account in an amount equal to 3% of each executive’s eligible earnings, up to the maximum permitted.~~

The Company’s board of directors approved a cash bonus plan applicable in 2004 for all of its full-time, salaried employees, including the CEO, COO, CFO, division presidents, executives, managers, field construction staff, and certain other employees. Under the terms of this plan, the CEO, COO and CFO are eligible to receive bonuses based upon specified percentages of the Company’s pretax, pre-bonus income. Division presidents are eligible to receive bonuses based upon specified percentages of their respective division pre-tax, pre-bonus income. All other participants are eligible to receive bonuses based upon specified percentages of a bonus pool determined as a specified percentage of pre-tax, pre-bonus income.

For the CEO, COO, CFO, division presidents, executives and managers, awards are paid over two years, with 75% paid following the determination of bonus awards, and 25% paid one year later. The deferred amounts would be forfeited in the event of termination for any reason except retirement, death or disability.

The Company has implemented deferred compensation plans that allow certain officers and employees to defer a portion of their total income (base salary and bonuses). The deferral amount can be up to 20% of total income with a minimum of $10,000 annually.

~~Options/SAR Grants in Fiscal Year Ended December 31, 2004~~

~~No options were granted during 2004 to any director or Named Officer.~~

On March 7, 2000, the compensation committee of the Company’s board of directors unanimously voted to recommend for approval to the board of directors a proposed compensation package which included the William Lyon Homes 2000 Stock Incentive Plan (the “Stock Incentive Plan”). Subject to adoption and approval of the Stock Incentive Plan by the Company’s stockholders, on April 6, 2000, acting by unanimous written consent, the board of directors approved and adopted the Stock Incentive Plan. At the Company’s 2000 Annual Meeting on May 9, 2000, the stockholders adopted and approved the Stock Incentive Plan. The Stock Incentive Plan is administered by the compensation committee, by a delegation of the board of directors.

The purpose of the Stock Incentive Plan is to attract and retain the best available personnel, to provide additional incentive to key employees, officers and directors, and to promote the success of the Company’s business. One million shares of common stock are reserved for issuance under the Stock Incentive Plan, subject to adjustments related to changes in capitalization.

Both options intended to qualify as incentive stock options and nonqualified options may be granted under the Stock Incentive Plan. Nonqualified stock options may be granted to employees, consultants and directors. Incentive stock options may be granted only to employees. Options may be coupled with a stock appreciation right. Grants or sales of common stock also may be made to employees, consultants or directors upon terms and conditions determined by the Stock Incentive Plan’s administrator.

The Stock Incentive Plan will continue in effect for a term of ten years, unless terminated earlier as provided for in the Stock Incentive Plan. The term of each option will be stated in the applicable option agreement, but in no event may the term be more than ten years from the date of grant.

Effective on May 9, 2000, the Company issued options under the Stock Incentive Plan to purchase a total of 627,500 shares of common stock at $8.6875 per share. During the year ended December 31, 2001, the Company issued additional options under the Stock Incentive Plan to purchase 32,500 shares of common stock at an average price of $11.50 per share. During the year ended December 31, 2004, options were exercised to purchase 92,964 shares, 6,666 shares and 4,166 shares of common stock at a price of $8.6875, $13.00 and $9.10, respectively. During the year ended December 31, 2003, options were exercised to purchase 240,359 shares, 10,000 shares and 8,334 shares of common stock at a price of $8.6875, $13.00 and $9.10, respectively. During the year ended December 31, 2002, options were exercised to purchase 102,504 shares and 3,334 shares of common stock at a price of $8.6875 and $13.00, respectively. As of December 31, 2004, 56,666 options have been forfeited and 85,831 options priced at $8.6875 remain unexercised. All unexercised options expire on the date that is ten years after the date of the grant of such option.

~~Aggregated Option Exercises and Fiscal Year-end Option Value Table~~

The following table sets forth the information noted for all exercises of stock options during the fiscal year ended December 31, 2004 by each of the Named Officers and the fiscal year end value of unexercised options.

Shares
Acquired On
Exercise(#)(1)

Value
Realized($)(2)

Number of Securities Underlying
Unexercised Options/SARS At
Fiscal Year-End(#)(1)

Value of Unexercised
In-The-Money
Options/SARS At Fiscal
Year-End($)(1)
Exercisable
Unexercisable
Exercisable
Unexercisable
General William Lyon
— — — — — —
Wade H. Cable
— — 50,000 0 $ 3,077,625 0
Douglas F. Bauer
— — 0 0 0 0
Thomas J. Mitchell
— — 0 0 0 0
Mary J. Connelly
8,000 $ 602,500 8,665 0 $ 533,352 0

~~(1)~~

All exercised, exercisable and unexercisable options for each of the Named Officers were granted on May 9, 2000 under the Stock Incentive Plan. The options granted under the Stock Incentive Plan vested one-third on May 9, 2001, one-third on May 9, 2002 and one-third on May 9, 2003. The exercise price of these options is $8.6875. The value of unexercised in-the-money options is calculated by determining the difference between the closing price of the Company’s common stock on the New York Stock Exchange at December 31, 2004 ($70.24 per share) and the exercise price of the options.

~~(2)~~

~~The value realized is calculated by determining the difference between the closing price of the Company’s common stock on the New York Stock Exchange at exercise and the exercise price.~~

~~Securities Authorized for Issuance Under Equity Compensation Plans~~

~~The following table sets forth information as of December 31, 2004 with respect to compensation plans under which the Company’s Common Stock is authorized for issuance.~~

Plan Category

Number of
securities to be
issued upon
exercise of
outstanding
options,
warrants and rights
(a)

Weighted-average
exercise price of
outstanding
options, warrants
and rights
(b)

Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column (a))
(c)
Equity compensation plans approved by security holders
   85,831    $ 8.6875    396,666
Equity compensation plans not approved by security holders
   N/A    N/A    N/A



Total
   85,831    $ 8.6875    396,666

~~No compensation plan under which the Company’s Common Stock is authorized for issuance was adopted without the approval of the Company’s stockholders.~~

~~Employment Contracts, Termination of Employment and Change-in-Control Arrangements~~

Employees, including executive officers, enter into annual employment agreements which provide that their employment is at-will. The employment agreements with each of General William Lyon, Wade H. Cable, Douglas F. Bauer, Thomas J. Mitchell and Mary J. Connelly provide for an annual salary effective January 1, 2005 of $1,000,000, $500,000, $225,000, $225,000 and $225,000 respectively. Effective July 1, 2005, Mr. Bauer was appointed Executive Vice President and his annual salary was increased effective July 1, 2005 to $275,000. Each employment agreement also provides for a monthly automobile allowance of $400, except for General William Lyon.

The Company has entered into indemnification agreements with all of its directors and the Named Officers, among others, to provide them with the maximum indemnification allowed under the Company’s certificate of incorporation and applicable law, including indemnification for all judgments and expenses incurred as the result of any lawsuit in which such person is named as a defendant by reason of being a director, officer or employee of the Company, to the maximum extent such indemnification is permitted by the laws of Delaware.

~~Compensation Committee Interlocks and Insider Participation~~

The members of the Company’s 2004 Compensation Committee were General James E. Dalton and Messrs. William H. McFarland, Alex Meruelo, Michael L. Meyer and Randolph W. Westerfield. None of the members of the Compensation Committee has ever been an officer or employee of the Company or any of its subsidiaries. None of the Company’s executive officers has ever served as a director or member of the Compensation Committee (or other board committee performing equivalent functions) of another entity, one of whose executive officers served in either of those capacities for the Company.

~~Compensation Committee Report on Executive Compensation~~

In order to attract and retain well-qualified executives, which the Compensation Committee believes is crucial to the Company’s success, the Compensation Committee’s general approach to compensating executives is to pay cash salaries which are commensurate with the executives’ experience and expertise and, where relevant, are competitive with the salaries paid to executives in the Company’s industry and primary geographic locations. In addition, to align executive compensation with the Company’s business strategies, values and

management initiatives, both short and long term, the Compensation Committee may, with the Board’s approval, authorize the payment of discretionary bonuses based upon an assessment of each executive’s contributions to William Lyon Homes. In general, the Compensation Committee believes that these discretionary bonuses should be related to the Company’s and the executive’s performance.

~~Chief Executive Officer Compensation~~ — The compensation program for the Chief Executive Officer (“CEO”) was comprised of two components, base salary and incentive compensation in the form of a bonus. The CEO’s base salary is established annually in light of the factors discussed above and job performance. The CEO’s job performance was evaluated by reference to the Company’s performance with respect to new home orders, homes closed, land acquisitions, revenue and earnings, return on stockholder equity, improving capital structure and financial condition, as well as the CEO’s leadership and team-building skills. The CEO participates in the 2004 Cash Bonus Plan as described below in which he is eligible to receive bonuses based upon specified percentages of the Company’s pre-tax, pre-bonus income. No stock options were granted to the CEO during 2004.

~~Compensation With Respect to Other Executive Officers~~ — The Company’s compensation for the other executive officers was comprised of a base salary and incentive compensation pursuant to the 2004 Cash Bonus Plan described below. Each of the Named Officers also receives an auto allowance, a policy that was instituted in 2000. The rate of compensation for each of the other executive officers has been in effect for varying periods, and is based in part upon the review of a survey of compensation paid by other homebuilders of similar size. No stock options were granted to the other executive officers during 2004.

~~2004 Cash Bonus Plan~~ — The 2004 Cash Bonus Plan (the “2004 Plan”) provides that the CEO, the Chief Operating Officer (“COO”) and Chief Financial Officer (“CFO”) are eligible to receive bonuses based upon specified percentages of the Company’s pretax, pre-bonus income. Division presidents are eligible to receive bonuses based upon specified percentages of their respective division pre-tax, pre-bonus income. All other participants are eligible to receive bonuses based upon specified percentages of a bonus pool consisting of a specified percentage of pre-tax, pre-bonus income. For the CEO, COO, CFO, division presidents, executives and managers, awards are paid over two years, with 75% paid following the determination of bonus awards, and 25% paid one year later. The deferred amounts would be forfeited in the event of termination for any reason except retirement, death or disability.

~~Section 162(m)~~ — Section 162(m) of the Internal Revenue Code provides that any publicly-traded corporation will be denied a deduction for compensation paid to certain executive officers to the extent that the compensation exceeds $1,000,000 per officer per year. However, the deduction limit does not apply to “performance-based compensation,” as defined in Section 162(m). The 2004 Cash Bonus Plan is intended to provide bonuses that are considered “performance-based compensation” and therefore exempt from the deductibility limitations imposed under Section 162(m). Although the Company’s general approach is to establish compensation practices that are cost-efficient with respect to taxes, the Company reserves the authority to award compensation that is not deductible under Section 162(m) to the Company’s executive officers in the future to the extent consistent with other compensation objectives.

~~Submitted by the COMPENSATION COMMITTEE~~

Randolph W. Westerfield, Chairman*

James E. Dalton*

William H. McFarland*

~~Alex Meruelo~~

Michael L. Meyer*

~~February 28, 2005~~

~~Not currently a director.~~

The Compensation Committee report shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates this information by reference.

~~Certain Business Relationships and Related Transactions~~

~~Acquisition of Real Estate Projects from Entities Controlled by General William Lyon and/or William H. Lyon.~~

On October 26, 2000, the Company’s board of directors (with General William Lyon and William H. Lyon abstaining) approved the purchase of 579 lots for a total purchase price of $12,581,000 from an entity controlled by General William Lyon and William H. Lyon. The terms of the purchase agreement provide for an initial option payment of $1,000,000 and a rolling option takedown of the lots. In addition, one-half of the net profits in excess of six percent from the development are to be paid to the seller. Phase takedowns of approximately 20 lots were anticipated to occur at periodic intervals for each of several product types through September 2004. As of December 31, 2004, all lots were purchased under this agreement. During the years ended December 31, 2004, 2003 and 2002, the Company purchased 92, 72 and 183 lots, respectively, under this agreement for a total purchase price of $1,984,000, $2,507,000 and $4,150,000, respectively. During the nine months ended September 30, 2005 and the years ended December 31, 2004, 2003 and 2002, the Company paid $1,949,000, $1,689,000, $0 and $1,614,000, respectively for one-half of the net profits in excess of six percent from the development. This land acquisition qualified as an affiliate transaction under the Company’s 12½% Senior Notes due July 1, 2003 Indenture dated as of June 29, 1994 (“Indenture”). Pursuant to the terms of the Indenture, the Company determined that the land acquisition is on terms that are no less favorable to the Company than those that would have been obtained in a comparable transaction by the Company with an unrelated person. The Company delivered to the Trustee under the Indenture a resolution of the Company’s Board of Directors set forth in an Officers’ Certificate certifying that the land acquisition is on terms that are no less favorable to the Company than those that would have been obtained in a comparable transaction by the Company with an unrelated person and the land acquisition was approved by a majority of the disinterested members of the Company’s Board of Directors of the Company. Further, the Company delivered to the Trustee under the Indenture a determination of value by a real estate appraisal firm which is of regional standing in the region in which the subject property is located and is MAI certified.

On July 9, 2002, the Company’s Board of Directors (with General William Lyon and William H. Lyon abstaining) approved the purchase of 144 lots, through a land banking arrangement, for a total purchase price of $16,660,000 from an entity that purchased the lots from General William Lyon. The terms of the purchase agreement provide for an initial deposit of $3,300,000 (paid on July 23, 2002) and monthly option payments of 11.5% on the seller’s outstanding investment. Such option payments entitle the Company to phase takedowns of approximately 14 lots each, which were anticipated to occur at one to two month intervals through March 2004. As of December 31, 2004, all lots were purchased under this agreement. During the years ended December 31, 2004, 2003 and 2002, 43, 85 and 16 lots have been purchased under this agreement for a purchase price of $4,975,000, $9,834,000 and $1,851,000, respectively. Had the Company purchased the property directly from General Lyon, the acquisition would have qualified as an affiliate transaction under the Indenture. Even though the Company’s agreement is not with General William Lyon, the Company chose to treat it as an affiliate transaction. Pursuant to the terms of the Indenture, the Company determined that the land acquisition is on terms that are no less favorable to the Company than those that would have been obtained in a comparable transaction by the Company with an unrelated person. The Company delivered to the Trustee under the Indenture a resolution of the Board of Directors of the Company set forth in an Officers’ Certificate certifying that the land acquisition is on terms that are no less favorable to the Company than those that would have been obtained in a comparable transaction by the Company with an unrelated person and the land acquisition was approved by a majority of the disinterested members of the Board of Directors of the Company. Further, the Company has delivered to the Trustee under the Indenture a determination of value by a real estate appraisal firm which is of regional standing in the region in which the subject property is located and is MAI certified.

~~Purchase of Land from Unconsolidated Joint Venture.~~

The Company purchased land for a total purchase price of $116,096,000, $33,655,000, $8,440,000 and $17,079,000 during the nine months ended September 30, 2005 and the years ended December 31, 2004, 2003 and 2002, respectively, from certain of the Company’s joint ventures.

~~Agreements with Entities Controlled by William Lyon and William H. Lyon.~~

For the nine months ended September 30, 2005 and the years ended December 31, 2004, 2003 and 2002, the Company incurred reimbursable on-site labor costs of $99,000, $183,000, $277,000 and $178,000, respectively, for providing customer service to real estate projects developed by entities controlled by General William Lyon and William H. Lyon, of which $26,000 and $25,000 was due to the Company at December 31, 2004 and 2003, respectively. In addition, the Company earned fees of $28,000, $110,000, $109,000 and $99,000, for tax and accounting services performed for entities controlled by General William Lyon and William H. Lyon during the nine months ended September 30, 2005 and the years ended December 31, 2004, 2003 and 2002, respectively.

~~Rent Paid to a Trust of which William H. Lyon is the Sole Beneficiary.~~

For the nine months ended September 30, 2005 and the years ended December 31, 2004, 2003, and 2002, the Company incurred charges of $566,000, $755,000, $753,000, and $729,000, respectively, related to rent on the Company’s corporate office, from a trust of which William H. Lyon is the sole beneficiary.

~~Charges Incurred Related to the Charter and Use of Aircraft.~~

During the years ended December 31, 2004, 2003 and 2002, the Company incurred charges of $172,000, $250,000 and $177,000, respectively, related to the charter and use of aircraft owned by an affiliate of General William Lyon.

Effective September 1, 2004, the Company entered into an aircraft consulting and management agreement with an affiliate (the “Affiliate”) of William Lyon to operate and manage the Company’s aircraft which was placed in service effective as of September 1, 2004. The terms of the agreement provide that the Affiliate shall consult and render its advice and management services to the Company with respect to all functions necessary to the operation, maintenance and administration of the aircraft. The Company’s business plan for the aircraft includes (i) use by Company executives for traveling on Company business to the Company’s divisional offices and other destinations, (ii) charter service to outside third parties and (iii) charter service to General William Lyon personally. Charter services for outside third parties and General William Lyon personally are contracted for at market rates. As compensation to the Affiliate for its management and consulting services under the agreement, the Company pays the Affiliate a fee equal to (i) the amount equal to 107% of compensation paid by the Affiliate for the pilots supplied pursuant to the agreement, (ii) $50 per operating hour for the aircraft and (iii) $9,000 per month for hangar rent. In addition, all maintenance work, inspections and repairs performed by the Affiliate on the aircraft are charged to the Company at the Affiliate’s published rates for maintenance, inspection and repairs in effect at the time such work is completed. The total amounts paid to the Affiliate under the agreement were $1,084,000 for the nine months ended September 30, 2005 and $509,000 for the year ended December 31, 2004.

Pursuant to the agreement above, the Company had earned revenue of $366,000 and $187,000 for charter services provided to General William Lyon personally, during the nine months ended September 30, 2005 and the year ended December 31, 2004, respectively.

~~Mortgage Loans.~~

In 2004, the Company offered home mortgage loans to its employees and directors through its mortgage company subsidiary, Duxford Financial, Inc. These loans were made in the ordinary course of business and on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable

~~transactions with other persons. These loans did not involve more than the normal risk of collectability or present other unfavorable features and were sold to investors typically within 7 to 15 days.~~

~~Home Purchases~~

On May 28, 2004 and June 18, 2004, General William Lyon and his wife, Willa Dean Lyon, purchased two of the Company’s homes for a total purchase price of approximately $877,000. The purchase prices were based on the prices offered to third parties and no discounts were given. The homes were purchased for use as residences by certain family members.

On October 28, 2004, one of the Company’s directors, Michael L. Meyer, purchased one of the Company’s homes for a total purchase price of approximately $835,000. The purchase price was based on the prices offered to third parties and no discounts were given.

~~Finder’s Fee Agreement~~

The Company and Alex Meruelo are parties to an agreement pursuant to which Mr. Meruelo is eligible to receive a finder’s fee based upon the cash distributions received by a subsidiary of the Company from a joint venture development project relating to a portion of the Fort Ord military base in Monterey County, California. The joint venture development project resulted from Mr. Meruelo’s introduction of the Company to Woodman Development Company, LLC (“Woodman”) and the subsequent formation of East Garrison Partners I, LLC (“EGP”) as a joint venture between Woodman and Lyon East Garrison Company I, LLC (“EGC”). The finder’s fee will equal 5% of all net cash distributions distributed by EGP to EGC with respect to EGC’s existing 50% interest in EGP that are in excess of distributions with respect to certain deficit advances, deficit preferred returns, returns of capital and preferred returns on unreturned capital. The calculation of the finder’s fee will be based on net cash distributions received from EGP on land sales and will not be determined on the basis of any revenues, profits or distributions received from any affiliate of EGC for the construction and sale or leasing of residential or commercial buildings on such lots. Mr. Meruelo is not obligated to perform any services for EGC other than the introduction to Woodman.

~~Certain Family Relationships.~~

William H. Lyon, one of the Company’s directors and the Vice President and Chief Administrative Officer of the Company, is the son of General William Lyon. General William Lyon is the Company’s Chairman of the Board of Directors and the Chief Executive Officer. In 2004, William H. Lyon received a base salary of $115,000 and a monthly car allowance of $400 from the Company, and earned a bonus of $398,202 under the terms of the Company’s 2004 Cash Bonus Plan. The bonus earned by William H. Lyon in 2004 is consistent with bonuses earned by other Company employees with similar responsibilities.

Terry A. Connelly, who is Vice President and Director of Operations of the Company’s Nevada Division, is married to Mary J. Connelly, President of the Nevada Division. In 2004, Mr. Connelly received a base salary of $139,800 and a monthly car allowance of $400 from the Company, and earned a bonus of $815,630 under the terms of the Company’s 2004 Cash Bonus Plan. The bonus earned by Mr. Connelly in 2004 is consistent with the bonuses earned by other Company employees with similar responsibilities.

Jeffrey D. Frankel, who is an Assistant Project Manager in the Company’s Northern California Division, is the son of Richard E. Frankel, a director of the Company. In 2004, Mr. Frankel received salary payments of $66,844 (based on an annual base salary of $95,000) and a monthly car allowance of $400 from the Company, and earned a bonus of $117,049 under the terms of the Company’s 2004 Cash Bonus Plan. The bonus earned by Mr. Frankel in 2004 is consistent with the bonuses earned by other Company employees with similar responsibilities.

~~Common Stock Price Performance~~

~~The graph below compares the cumulative total return of the Common Stock of the Company, the S & P 500 Index and the S & P Homebuilding Index:~~

The graph above is based upon common stock and index prices calculated as of December 31 for 1999, 2000, 2001, 2002, 2003 and 2004. The base period is December 31, 1999, on which date the closing price of the Company’s Common Stock was $5.50 per share. Total return assumes an investment of $100 at market close on December 31, 1999 in the Company, the S&P 500 Index and the S&P Homebuilding Index. On December 31, 2004, the Company’s Common Stock closed at $70.24 per share. The stock price performance of the Company’s Common Stock depicted in the graph above represents past performance only and is not necessarily indicative of future performance.

~~Section 16(a) Beneficial Ownership Reporting Compliance~~

Based solely upon a review of reports received by the Company during or with respect to the year ended December 31, 2004 pursuant to Rule 16a-3(e) of the Securities Exchange Act of 1934, all reports required during or with respect to the year ended December 31, 2004 on Form 3, Form 4 and Form 5 were timely filed by the Company’s directors, officers and 10% stockholders.

~~PROPOSAL NO. 2~~

~~APPROVAL OF 2005 SENIOR EXECUTIVE BONUS PLAN~~

At the Annual Meeting, you will be asked to approve the adoption of the Company’s 2005 Senior Executive Bonus Plan (the “Plan”). The Plan has been adopted by the Compensation Committee of the Company’s Board of Directors and provides for performance awards payable in cash to certain participants under the Plan, which are contingent upon stockholder approval of the Plan.

~~Purpose of the Plan~~

The Board of Directors believes that adoption of the Plan is necessary to insure that the Company has the ability to attract and retain highly qualified senior executive officers by providing adequate incentives through performance awards. The adoption of the Plan will also permit the granting of performance awards payable in cash on the attainment of performance goals to certain senior executive officers of the Company which will qualify as “performance based” compensation under Section 162(m) of the Internal Revenue Code, as amended (the “Code”), as discussed below.

~~Required Vote~~

~~The affirmative vote of a majority of the votes cast at the Annual Meeting by the holders of Common Stock is required to approve the Plan.~~

~~Effect of Vote on Prior Grants~~

The Plan provides for performance awards payable in cash to certain participants under the Plan, as described below. None of such awards have yet been paid. If the Plan is approved at the Meeting, the awards will be paid on the attainment of the performance goals and on the satisfaction of other conditions to payment, as described below. If the Plan is not approved at the Meeting, the awards will be cancelled.

~~The Board of Directors recommends a vote “For” approval of the 2005 Senior Executive Bonus Plan.~~

~~Summary of the Plan~~

~~The principal features of the Plan are summarized below. A copy of the Plan is attached hereto as Appendix B.~~

~~Eligibility and Participation~~

~~The Plan applies to the Company’s Chief Executive Officer (“CEO”) and Chief Operating Officer (“COO”) and its Division Presidents.~~

~~Administration of the Plan~~

The Plan shall be administered by the Compensation Committee of the Board of Directors (the “Committee”) consisting of two or more directors of the Company who are both (a) “non-employee directors” within the meaning of Rule 16b-3 of the Exchange Act, and (b) “outside directors” within the meaning of Section 162(m) of the Code. The Committee has broad discretion and power in interpreting and operating the Plan, provided that it will not exercise discretion in a manner inconsistent with the qualification of awards granted to executive officers of the Company whose compensation is subject to the deductibility limit of Section 162(m) of the Code as “performance based” compensation.

~~Determination and Payment of Amount of Awards~~

The Plan provides for bonuses only in respect of 2005. Under the terms of the Plan, the CEO and the COO will each be eligible to receive a bonus of 3% of the Company’s consolidated pre-tax, pre-bonus income. In addition, under the Plan, each Division President will be eligible to receive a bonus of 3% of the division’s pre-tax, pre-bonus income, determined after allocation to the division of its allocable portion of corporate general and administrative expenses. The Committee will exercise its discretion to increase or decrease the award of a particular executive in the event of extraordinary or substandard performance, which determination may be made on the basis of either objective or subjective criteria. However, the Committee will not exercise any discretion to increase the bonus of any executive officer of the Company whose compensation is subject to the deductibility limit of Section 162(m) of the Code above the amount determined under the formulas set forth above and may not waive the achievement of the applicable performance goals for such executive officers.

An executive’s right to receive a bonus under the Plan is conditioned upon his or her being actively employed by the Company or its divisions or subsidiaries on the date of payment, except in the case of retirement, death or disability. Awards under the Plan will be paid over two years, with 75% paid following the determination of the bonus awards, and 25% paid one year later. The amounts payable one year later are conditioned upon continued employment to the date of payment, except in the case of retirement, death or disability. All awards under the Plan will be prorated downward if the sum of all of the calculated awards under the Plan and the Company’s 2005 bonus plans for other officers and employees of the Company and its subsidiaries would exceed 20% of the Company’s consolidated pre-tax, pre-bonus income.

The Company intends that performance awards granted to executive officers of the Company whose compensation is subject to the deductibility limit of Section 162(m) of the Code will qualify as “performance based” compensation. Before the payment of any award that is intended to constitute “performance based” compensation within the meaning of Section 162(m) of the Code, the Committee shall certify in writing that the applicable performance criteria have been achieved to the extent necessary for such award to so qualify. The Committee shall have the power to impose such other restrictions on awards intended to constitute “performance based” compensation as it may deem necessary or appropriate to ensure that such awards satisfy all requirements to constitute “performance based” compensation within the meaning of Section 162(m), or which are not inconsistent with such requirements.

~~New Plan Benefits~~

The awards that will be received by any person under the Plan, if the Plan is approved, are not determinable at this time because awards under the Plan will be determined based on the pre-tax, pre-bonus income for 2005 of the Company or its divisions, as applicable, and are subject to downward and, in some cases, upward adjustment by the Committee under certain circumstances as described above. As a result, the grants that may be awarded under the Plan are not determinable until the Committee assesses the criteria relevant to each individual participant. However, the Plan is substantially similar to the Company’s 2004 bonus plan for senior executives (the “2004 Plan”) and the following table reflects the amounts which were awarded under the 2004 Plan. To the extent that the Company’s pre-tax, pre-bonus income for 2005 is above that for 2004, bonuses under the Plan in 2005 will likely be higher than in 2004.

~~NEW PLAN BENEFITS(1)~~

~~2005 SENIOR EXECUTIVE BONUS PLAN~~

Name and Position
   Dollar Value ($)
(Based on 2004)
General William Lyon, Chairman of the Board and Chief Executive Officer
   $ 10,176,870
Wade H. Cable, Director, President and Chief Operating Officer
   $ 10,176,870
Douglas F. Bauer, Executive Vice President and Northern California Division President
   $ 3,273,060
Thomas J. Mitchell, Senior Vice President and Southern California Division President
   $ 2,667,000
Mary J. Connelly, Senior Vice President and Nevada Division President
   $ 1,857,360
Current Executive Officers
   $ 30,529,860
Current Directors That Are Not Executive Officers
   $ 0
All Employees (including all current officers who are not executive officers)
   $ 0

~~(1)~~

Does not include bonuses awarded to executive officers and employees (including current officers who are not executive officers) of the Company and its subsidiaries who are not participants in the 2005 Senior Executive Bonus Plan but who participated in other Company bonus plans in 2004. As noted above, total bonuses under all of the Company’s 2005 bonus plans shall not exceed 20% of the Company’s pre-tax, pre-bonus consolidated income.

~~Federal Income Tax Matters~~

The following discussion of federal income tax consequences does not purport to be a complete analysis of all of the potential tax effects of the Plan. It is based upon laws, regulations, rulings and decisions now in effect, all of which are subject to change. No information is provided with respect to persons who are not citizens or residents of the United States, or foreign, state or local tax laws, or estate and gift tax considerations. In addition, the tax consequences to a particular participant may be affected by matters not discussed above. ACCORDINGLY, EACH PARTICIPANT IS URGED TO CONSULT HIS TAX ADVISOR CONCERNING THE TAX CONSEQUENCES TO HIM OF THE PLAN, INCLUDING THE EFFECTS OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND OF CHANGES IN THE TAX LAWS.

~~The Plan is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”) and is not qualified under Section 401(a) of the Code.~~

In general, the recipient of an award will recognize compensation income when the award is paid, and, subject to the provisions of Section 162(m) of the Code, the Company will take a corresponding deduction. The Company will withhold income and payroll taxes as required by law from the payment of awards.

Section 162(m) of the Code provides that any publicly-traded corporation will be denied a deduction for compensation paid to certain executive officers to the extent that the compensation exceeds $1,000,000 per officer per year. However, the deduction limit does not apply to “performance based” compensation, as defined in Section 162(m). Compensation is performance based compensation if (i) the compensation is payable on account of the attainment of one or more performance goals; (ii) the performance goals are established by a

compensation committee of the Board of Directors of directors consisting of “outside directors”; (iii) the material terms of the compensation and the performance goals are disclosed to and approved by the stockholders in a separate vote; and (iv) the compensation committee certifies that the performance goals have been satisfied. The Company believes that, if the stockholders approve the Plan, awards granted to executive officers whose compensation is subject to the deduction limit of Section 162(m) will qualify as performance based compensation, and therefore be deductible without regard to the limitation of Section 162(m) of the Code.

~~PROPOSAL NO. 3~~

~~RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~

The Board of Directors is seeking stockholder ratification of the Audit Committee’s selection of Ernst & Young LLP to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2005. Kenneth Leventhal & Company, which merged with Ernst & Young LLP in 1995, had served as the former The Presley Companies’ independent auditors since 1987 and the Company’s independent auditors since its formation. It is anticipated that representatives from Ernst & Young LLP will attend the Annual Meeting, will have the opportunity to make any statements they desire to make and will be available to respond to appropriate questions from stockholders.

~~The Board of Directors recommends a vote “For” the ratification of the Audit Committee’s~~

~~selection of Ernst & Young LLP as our independent registered public accounting firm.~~

~~OTHER BUSINESS~~

We know of no other matters to be brought before the Annual Meeting. If other matters should come before the Annual Meeting, it is the intention of each person mentioned in the proxy to vote such proxy in accordance with his or her judgment on such matters. Discretionary authority with respect to such other matters is granted by the execution of the enclosed proxy materials.

~~STOCKHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING~~

Proposals by stockholders intended to be presented at the next annual meeting in 2006 must be sent in writing to the Vice President and Corporate Secretary of the Company at our principal executive offices and received by June 27, 2006 to be considered for inclusion in the Company’s proxy materials under the rules of the Securities and Exchange Commission if the next annual meeting were held in November 2006. However, the Company will likely elect to hold its next annual meeting in the spring or summer of 2006, in which event any such stockholder proposals would have to be received by the Company a reasonable time before the Company’s solicitation is made. In addition, the proxy statement for the next year’s annual meeting will confer discretionary authority to the Board of Directors to vote on any stockholder proposal presented, unless the Company receives timely notice of such stockholder as provided for in the Company’s Bylaws. Further, in order for stockholder proposals to be eligible to be brought before the Company’s stockholders at the next annual meeting, the stockholder submitting such proposals must also comply with the procedures, including the deadlines, required by the Company’s Bylaws, as described below. Stockholder nominations of directors are not stockholder proposals within the meaning of the Securities and Exchange Commission’s Rule 14a-8 and are not eligible for inclusion in the Company’s proxy statement.

The Bylaws of the Company require that all proposals for business to be transacted at a stockholder meeting, other than those made by the Board of Directors, be made pursuant to written notice to the Vice President and Corporate Secretary of the Company. The notice must be received not later than 90 days in advance of such meeting, or, if later, the seventh day following the first public announcement of the date of such meeting. The notice must set forth a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, the name and address, as they appear on the Company’s books, of the stockholder proposing such business, the class and number of shares of the Company which are beneficially owned by the stockholder, and any material interest of the stockholder in such business. In addition, the stockholder making such proposal shall promptly provide any other information reasonably requested by the Company.

The Bylaws of the Company require that all nominations for persons to be elected Directors, other than those made by the Board of Directors, be made pursuant to written notice to the Vice President and Corporate Secretary of the Company. The notice must be received not later than 90 days in advance of such meeting, or, if later, the seventh day following the first public announcement of the date of such meeting. The notice must set forth (1) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated, (2) a representation that the stockholder is a holder of record of stock of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting and nominate the person or persons specified in the notice, (3) a description of all arrangements or understanding between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder, including such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the United States Securities and Exchange Commission, had the nominee been nominated, or intended to be nominated, by the Board of Directors, and (4) the consent of each nominee to serve as a director of the Company if so elected. In addition, the stockholder making such nomination shall promptly provide any other information reasonably requested by the Company.

~~FINANCIAL STATEMENTS; ANNUAL REPORT~~

Our 2004 Annual Report on Form 10-K, as amended and exclusive of exhibits, including financial statements for fiscal year 2004, accompanies this Proxy Statement. Additional copies of our Annual Report on Form 10-K, as amended, as well as copies of our 2004 Annual Report, may be obtained without charge by writing to: William Lyon Homes, Attn: Investor Relations, 4490 Von Karman Avenue, Newport Beach, California 92660.

~~APPENDIX A~~

~~AUDIT COMMITTEE CHARTER~~

~~William Lyon Homes~~

~~Audit Committee~~

~~Charter~~

~~(Amended and Restated February 18, 2004)~~

~~Article I~~

~~Formation and Purpose~~

~~1. The Board of Directors (the “Board”) of William Lyon Homes, a Delaware corporation (the “Company”) has formed the Audit Committee (the “Committee~~”) pursuant to Section 141(c)(2) of the Delaware General Corporation Law and Article V of the Company’s Bylaws. The purposes of the Committee are (1) to assist Board oversight of (a) the integrity of the Company’s financial statements, (b) the Company’s compliance with legal and regulatory requirements, (c) the Company’s independent auditors’ qualifications and independence, and (d) the performance of the Company’s internal audit function and independent auditors, and (2) to prepare an audit committee report as required by the Securities and Exchange Commission (“~~SEC”) to be included in the Company’s annual proxy statement.~~

2. The Committee shall fulfill its purposes by carrying out the functions set forth in Article III. In addition, the Committee shall have such other powers and responsibilities as may be expressly delegated to the Committee from time to time by the Board. Subject to any restrictions set forth in the Company’s Certificate of Incorporation and Bylaws and applicable law, the Committee shall have all power and authority necessary or appropriate to carry out its purposes and responsibilities.

3. In discharging its role, the Committee encourages free and open communication among the Committee, the Company’s independent auditors and management, and is empowered to investigate any matter brought to its attention with all requisite access to the books, records, facilities and personnel of the Company and with access to the Company’s outside legal counsel and other advisors. The Committee has the power to retain separate outside counsel or other advisors, different from the Company’s regular outside counsel and advisors, and to authorize such expenditures by the Company as it shall determine necessary for payment of compensation to (1) the independent auditors engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company, and (2) any counsel or advisers engaged by the Audit Committee. The Committee shall have direct responsibility for the appointment, compensation, retention and oversight of the Company’s independent auditors and the approval of all audit engagement fees and terms, as well as all significant non-audit engagements with the independent auditors. The independent auditors shall report directly to the Committee.

4. Management is responsible for preparing the Company’s financial statements and for their accuracy, and the Company’s independent auditors are responsible for auditing those financial statements. While the Committee has certain authority and oversight responsibilities under this charter, it is not the responsibility of the Committee to plan or conduct audits. In the absence of their possession of reason to believe that such reliance is unwarranted, the members of the Committee may rely without independent verification on the information provided to them and on the representations made by the Company’s management and the Company’s independent auditors. Accordingly, the Committee’s oversight does not provide an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Committee’s authority and oversight responsibilities do not assure that the audits of the Company’s financial statements have been carried out in accordance with generally accepted auditing standards, that the financial statements are presented in accordance with generally accepted accounting principles (“GAAP”) or that the Company’s independent auditors are in fact “independent.”

~~Article II~~

~~Composition~~

1. The Committee shall be comprised of not less than three members of the Board. Subject to the foregoing, the exact number of members of the Committee shall be fixed and may be changed from time to time by resolution duly adopted by the Board. Each Committee member shall be determined by the Board to be independent in accordance with the criteria set by the New York Stock Exchange, Inc. (“NYSE”) for board members and audit committee members and the rules promulgated by the SEC under the Securities Exchange Act of 1934, as amended (“Exchange Act”). All members shall meet the NYSE’s financial literacy requirements and at least one member shall be an “audit committee financial expert” as such term is defined in applicable SEC rules. If a member of the Audit Committee serves on the audit committees of three or more public companies and such member wishes to serve on the audit committee of another public company, then such member shall so notify the Board and the member may serve on the additional audit committee only if the Board determines that such simultaneous service would not impair the ability of such member to effectively serve on the Company’s Audit Committee. Such determination by the Board shall be disclosed in the Company’s annual proxy statement in accordance with applicable laws and regulations.

2. The members of the Committee shall be appointed by the Board and shall serve until their successors are appointed or until their earlier resignation or removal. The members shall serve at the pleasure of the Board and may be removed, with or without cause, from the Committee at any time by the Board.

3. The Board shall appoint one member of the Committee to serve as the Chair of the Committee. The Chair shall set the agenda for the Committee’s meetings, convene and chair the Committee’s meetings and act as the Committee’s representative to the Board in communicating with the Board and management. In addition, the Chair of the Committee shall preside at the executive sessions of the non-management members of the Board. If the Board fails to appoint a Chair of the Committee, the members of the Committee shall elect a Chair by majority vote of the full Committee to serve at the pleasure of the majority of the full Committee. The Chair of the Committee shall serve as Chair for not more than five consecutive years.

~~Article III~~

~~Key Functions~~

The Committee’s role is one of oversight. The Company’s management is responsible for preparing the Company’s financial statements and the Company’s independent auditors are responsible for auditing those financial statements. Additionally, the Committee recognizes that financial management, as well as the Company’s independent auditors, have more time, knowledge and more detailed information concerning the Company than do Committee members; consequently, in carrying out its oversight responsibilities, the Committee is not providing any expert or special assurance as to the Company’s financial statements or any professional certification as to work of the Company’s independent auditors. Further, auditing literature, particularly Statement of Auditing Standards No. 71, defines the term “review” to include a particular set of required procedures to be undertaken by independent auditors. The members of the Committee are not independent auditors, and the term “review” as applied to the Committee in this Charter is not intended to have that meaning and should not be interpreted to suggest that the Committee members can or should follow the procedures required of auditors performing reviews of financial statements. The Committee shall, subject to the requirements of the Company’s Certificate of Incorporation and Bylaws and applicable law, carry out the following responsibilities and functions:

~~1. Pre-Approval of Auditor Services.~~

(a) Approve in advance all auditing services, including the provision of comfort letters in connection with securities offerings, and non-audit services permitted by applicable law to be provided to the Company by the Company’s independent auditors, except non-auditing services which meet the following criteria:

(i) The aggregate amount of all such non-audit services provided to the Company constitute less than 5% of the total amount of revenues paid by the Company to its auditor during the fiscal year in which the non-audit services are provided;

~~A-2~~

~~(ii) The services were not recognized by the Company at the time of the engagement to be non-audit services; and~~

(iii) The services are promptly brought to the attention of the Committee and approved prior to the completion of the audit by the Committee or by one or more members of the Committee to whom authority to grant such approvals has been delegated by the Committee.

If the Committee approves an audit service within the scope of engagement of the independent auditor, the audit service shall be deemed to have been preapproved for purposes of this Article III.1. The Committee may delegate to one or more of its members the authority to grant pre-approvals. Any decision by a member to whom such authority has been delegated shall be presented to the Committee at its next meeting.

~~(b) Any approval by the Committee of a permitted non-audit service in the Company’s applicable periodic public filings shall be disclosed as required by law.~~

~~2. Oversight of Independent Auditing Services.~~

(a) Have direct responsibility for the appointment, compensation, retention and oversight of the work of any registered public accounting firm engaged (including resolution of disagreements between management and the auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company.

(b) Meet with the independent auditors to review and approve the plan and scope for each audit of the Company’s financial statements and related services, including proposed fees to be incurred with respect thereto.

(c) Review and recommend action with respect to the results of each independent audit of the Company’s financial statements and recommendations of the independent auditors arising as a result of such audit.

(d) Review with the independent auditors any audit problems or difficulties and management’s response, including any restrictions on the scope of the independent auditors’ activities or on access to requested information, and any significant disagreements with management. The review should also include a discussion of the responsibilities, budget and staffing of the Company’s internal audit function.

(e) Discuss with the Company’s independent auditors the matters required to be communicated pursuant to Statement on Auditing Standards No. 61 (“SAS 61”), as it may be amended or supplemented.

(f) At least annually, obtain and review a report by the independent auditors describing (i) the independent auditors’ internal quality-control procedures, (ii) any material issues raised by the most recent internal quality-control review, or peer review of the independent auditors, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the independent auditors, and any steps taken to respond to such issues, and (iii) all relationships between the independent auditors and the Company (which may be set forth in the disclosures required in Article III.2.(g) below).

~~(g) At least annually, discuss with the independent auditors their independence and receive each of the following in writing:~~

(i) disclosure of all relationships between the independent auditors and their related entities and the Company and its related entities that in the auditors’ professional judgment may reasonably be thought to bear on independence; and

~~(ii) confirmation that, in the auditors’ professional judgment, they are independent of the Company within the meaning of the federal securities laws.~~

~~A-3~~

(h) Discuss with the Company’s independent auditors any relationships or services disclosed by the independent auditors that may impact the objectivity and independence of the independent auditors and recommend to the Board any actions in response to the independent auditors’ disclosures to satisfy itself of the independent auditors’ independence.

~~(i) Obtain and review the reports of the Public Company Accounting Oversight Board with respect to the Company’s independent auditors when such reports are made publicly available.~~

(j) At least annually, evaluate the independent auditors’ qualifications, performance and independence, including a review and evaluation of the lead partner of the independent auditors, and present its conclusions to the Board. In making its evaluation, the Committee should take into account the opinions of management and the Company’s internal auditors (or other personnel responsible for the internal audit function) and should consider whether, in order to assure continuing auditor independence, there should be regular rotation of the audit firm itself.

~~3. Financial Statements and Disclosures.~~

(a) Review major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company’s selection or application of accounting principles.

(b) Review analyses prepared by management and/or the independent auditors setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative GAAP methods on the financial statements.

~~(c) Review the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the Company’s financial statements.~~

~~(d) Resolve any disagreements between management and the independent auditors regarding financial reporting.~~

~~(e) Receive the report of the independent auditor that performs for the Company any audit required by the Exchange Act with respect to each of the following:~~

~~(i) All critical accounting policies and practices to be used;~~

(ii) All alternative treatments of financial information within GAAP that have been discussed with management officials of the Company, the ramifications of the use of such alternative disclosures and treatments and the treatment preferred by the independent auditor; and

~~(iii) Other material written communications between the independent auditor and the Company such as any management letter or schedule of unadjusted differences.~~

(f) Review and discuss with the Company’s independent auditors and management the Company’s audited financial statements, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K.

(g) Based on (1) its review and discussions with management of the Company’s audited financial statements; (2) its discussion with the independent auditors of the matters to be communicated pursuant to SAS 61; and (3) the written disclosures from the Company’s independent auditors regarding independence, recommend to the Board whether the Company’s audited financial statements should be included in the Company’s Annual Report on Form 10-K for the last fiscal year for filing with the SEC.

(h) Review and discuss with the Company’s independent auditors and management the Company’s quarterly financial statements, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Quarterly Reports on Form 10-Q.

~~A-4~~

(i) Review and discuss earnings press releases (including the type and presentation of information to be included therein, particularly the use of “pro forma” or “adjusted” non-GAAP information), as well as financial information and earnings guidance provided to analysts and rating agencies. The Committee’s discussion may be general in nature (e.g., discussion of the types of information to be disclosed and the type of presentation to be made) and the Committee need not discuss in advance each earnings release or each instance in which the Company may provide earnings guidance.

~~4. Internal Accounting.~~

(a) Review with the Company’s independent auditors and financial management the adequacy and effectiveness of the Company’s system of internal accounting controls, including the adequacy of such controls to expose any payments, transactions or procedures that might be deemed illegal or otherwise improper and any special audit steps adopted in light of material control deficiencies.

(b) Prior to the Company’s filing of any Quarterly Report on Form 10-Q or Annual Report on Form 10-K, receive the following disclosures from the Company’s principal executive officer and principal financial officer with respect to the following:

(i) All significant deficiencies in the design or operation of internal controls over financial reporting which could adversely affect the Company’s ability to record, process, summarize and report financial data;

~~(ii) All material weaknesses in internal controls identified by such officers to the Company’s independent auditors; and~~

~~(iii) Any fraud, whether material or not material, that involves management of the Company or other employees who have a significant role in the Company’s internal controls.~~

(c) Obtain the attestation and report of the Company’s independent auditors on the assessment made by the Company’s management in the Company’s Annual Report on Form 10-K of the effectiveness of the Company’s internal control structure and procedures for financial reporting.

~~(d) Review the scope and results of the Company’s internal auditing procedures and practices and oversee the effectiveness thereof.~~

~~5. Management Conduct Policies.~~

~~(a) Establish procedures for:~~

~~(i) The receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters; and~~

~~(ii) The confidential, anonymous submission by employees of the Company and others of concerns regarding questionable accounting or auditing matters.~~

(b) Review from time to time and make recommendations with respect to the Company’s policies relating to management conduct and oversee procedures and practices to ensure compliance therewith. Such policies shall include, without limitation, those relating to (1) transactions between the Company and members of its management, (2) political contributions and other sensitive payments, (3) compliance with the Foreign Corrupt Practices Act, and (4) corporate or competitive opportunities offered or enjoyed by members of such management.

~~(c) Review from time to time and administer the Company’s Code of Business Conduct and Ethics, which includes those standards required by applicable SEC and NYSE rules.~~

~~(d) Make interpretations from time to time as to the scope and application of the Company’s management conduct policies.~~

~~A-5~~

~~(e) Review and approve or disapprove, as contemplated by the Company’s Code of Business Conduct and Ethics, proposed transactions between the Company and its employees or directors.~~

~~(f) Receive any report required to be made by the Company’s attorneys pursuant to the standards adopted by the SEC for professional conduct of attorneys appearing and practicing before the SEC.~~

~~6. Reports.~~

~~(a) Prepare an audit committee report as required by the SEC to be included in the Company’s annual proxy statement.~~

(b) Review with the Board, among other matters, any issues that arise with respect to the quality or integrity of the Company’s financial statements, the Company’s compliance with legal or regulatory requirements, the performance and independence of the Company’s independent auditors or the performance of the internal audit function.

~~(c) Report to the Board as necessary regarding the Committee’s recommendations and activities.~~

~~7. Other Duties.~~

(a) Discuss the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures and discuss guidelines and policies to govern the process by which the CEO and senior management assess and manage the Company’s exposure to risk.

(b) Set clear policies for the employment by the Company or its subsidiaries of employees or former employees of the independent auditors, taking into consideration the pressures that may exist for auditors consciously or subconsciously seeking a job with the Company.

(c) At least annually, review the adequacy of this charter and recommend to the Company’s Board of Directors any changes to this charter that the Committee deems necessary, appropriate or desirable.

~~(d) Conduct an annual self-evaluation of the performance of the Committee, including its effectiveness and compliance with this charter.~~

(e) Perform such other specific functions as the Board may from time to time direct, and make such investigations and reviews of the Company and its operations as the Chief Executive Officer or the Board may from time to time request.

~~(f) Conduct such investigations as the Committee deems necessary and retain outside experts, if required.~~

The foregoing functions and responsibilities are set forth as a guide with the understanding that the Committee may, to the extent permitted by applicable laws or regulations, diverge from this guide as appropriate given the circumstances. In addition, the Committee is authorized to take any actions reasonably related to the mandate of this Charter.

~~Article IV~~

~~Procedures and Meetings~~

1. The Committee shall keep regular minutes of its meetings. Meetings and actions of the Committee shall be governed by, and held and taken in accordance with, the provisions of Article IV of the Company’s Bylaws (other than Sections 4.2 and 4.7), with such changes in the context of those Bylaws as necessary to substitute the Committee, the Chair of the Committee and its members for the Board, the Chairman of the Board and its members. The Committee shall hold meetings as frequently as necessary at such time and such place as the Committee determines from time to time, with additional meetings to be held as circumstances dictate. In the absence of the Chair, a member designated by the Chair or designated by a majority of the members in attendance shall preside at meeting.

~~A-6~~

2. The Committee may, to the extent permitted by applicable laws and regulations, form and delegate any of its responsibilities to, a subcommittee so long as such subcommittee consists of at least two members of the Committee. The requirements for action by a subcommittee shall, except as otherwise provided by act of the Committee, be the same as applicable to the Committee.

3. All non-management directors who are not members of the Committee may attend and observe meetings of the Committee, but shall not participate in any discussion or deliberation unless invited to do so by the Committee, and in any event shall not be entitled to vote. To perform its oversight functions effectively, the Committee should meet separately, periodically, with management, with the internal auditors (or other personnel responsible for the internal audit function) and with the independent auditors. The Committee may, at its discretion and at the invitation of the Chair, include in its meetings members of the Company’s management, representatives of the Company’s outside advisors, any other personnel employed or retained by the Company or any other persons whose presence the Committee believes to be necessary or appropriate. Notwithstanding the foregoing, the Committee may also exclude from its meetings any persons it deems appropriate, including, but not limited to, any non-management director who is not a member of the Committee.

~~A-7~~

~~APPENDIX B~~

~~WILLIAM LYON HOMES~~

~~2005 SENIOR EXECUTIVE BONUS PLAN~~


~~BONUS PLAN~~ ~~PARTICIPANT~~	% ~~DEFERRED~~	~~DEFERRAL~~ ~~CRITERIA~~	~~PAYMENT~~ ~~CRITERIA~~	~~DESCRIPTION~~	~~PAY~~ ~~DATE~~

~~CEO AND COO~~	~~25%~~	~~75% paid Year 1~~ ~~25% paid Year 2 forfeited if terminated—except retirement, disability or death~~	~~3% of WLS pre-tax, pre-bonus income each~~	~~Based on:~~ ~~• Management Level~~ ~~• Position Impact w/WLS~~ ~~• Competitive Pay Levels~~ ~~• Short-Term Compensation Target for the Position~~ ~~• Current Salary~~ ~~• Individual Performance~~	~~After~~ ~~year-end~~ ~~Audit~~

~~DIVISION PRESIDENTS~~	~~25%~~	~~75% paid Year 1 25% paid Year 2 forfeited if terminated—except retirement, disability or death~~	~~3% of Division’s pre-tax, pre-bonus income after Corporate allocation~~ ~~minimum payment equal to 100% of annual salary~~	~~Based on:~~ ~~• Management Level~~ ~~• Position Impact w/WLS~~ ~~• Competitive Pay Levels~~ ~~• Short-Term Compensation Target for the Position~~ ~~• Current Salary~~ ~~• Individual Performance~~	~~After~~ ~~year-end~~ ~~Audit~~

~~Note:~~

~~Plan requires the employee to be actively employed on the date bonus checks are distributed to qualify for payment except in event of death, disability or retirement.~~

~~WLS represents William Lyon Homes stock symbol.~~

~~Awards to be administered (including no discretion to increase) in order to comply with Section 162(m), if applicable.~~

~~B-1~~

~~PROXY~~

~~WILLIAM LYON HOMES~~

~~PROXY for Annual Meeting of Holders of Common Stock of William Lyon Homes~~

~~to be held Wednesday, November 9, 2005~~

The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders of William Lyon Homes dated October 25, 2005 and the accompanying Proxy Statement relating to the above-referenced Annual Meeting, and hereby appoints Michael D. Grubbs, or in his absence, W. Douglass Harris, with full power to each of substitution and resubstitution, as attorneys and proxies of the undersigned.

Said proxies are hereby given authority to vote all shares of common stock of William Lyon Homes which the undersigned may be entitled to vote at the Annual Meeting of Holders of Common Stock of William Lyon Homes, to be held at 4:00 p.m. local time, on Wednesday, November 9, 2005, at The Balboa Bay Club & Resort, 1221 West Coast Highway, Newport Beach, California 92663 and at any and all adjournments or postponements thereof (the “Annual Meeting”) on behalf of the undersigned on the matters set forth on the reverse side hereof and in the manner designated thereon.

This proxy is solicited by the Board of Directors of William Lyon Homes, and when properly executed, the shares represented hereby will be voted in accordance with the instructions in this proxy. If no direction is made, this proxy will be voted FOR the election of all nominees named as Directors of William Lyon Homes on the reverse side hereof, FOR the approval of the Company’s 2005 Senior Executive Bonus Plan and FOR the ratification of the Audit Committee’s selection of the independent registered public accounting firm.

~~PLEASE DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE.~~

~~(SEE REVERSE SIDE)~~

~~Address Change/Comments (Mark the corresponding box on the reverse side)~~

é ~~FOLD AND DETACH HERE~~ é


		~~Please~~ ~~Mark Here~~ ~~for Address~~ ~~Change or~~ ~~Comments~~		¨
		~~SEE REVERSE SIDE~~

~~FOR~~ ~~all nominees (except as marked to the contrary below)~~

~~WITHHOLD~~
~~AUTHORITY~~
~~for all nominees~~

~~FOR~~

~~AGAINST~~

~~ABSTAIN~~

~~1: ELECTION OF 8 DIRECTORS:~~

~~Proposal to ratify the Audit Committee’s selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2005.~~

Signature [PLEASE SIGN WITHIN BOX]

Date

Signature (Joint Owners)

Date

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:

The Notice and Proxy Statement and Annual Report are available atwww.proxyvote.com.

Please date and sign exactly as your name(s) appear on this proxy card. If shares are registered in more than one name, all such persons should sign. A corporation should sign in its full corporate name by a duly authorized officer, stating your title. When signing as attorney, executor, administrator, trustee or guardian, please sign in your official capacity and give your full title as such. If a partnership, please sign in the partnership name by an authorized person.


¨		Preliminary Proxy Statement

¨

¨Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

x		Definitive Proxy Statement

¨		Definitive Additional Materials

¨		Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

WILLIAM LYON HOMES
x(Name of Registrant as Specified In Its Charter) ~~Definitive Proxy Statement~~


¨(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant) ~~Definitive Additional Materials~~

¨ ~~Soliciting Material Pursuant to §240.14a-12~~ Payment of Filing Fee (Check the appropriate box):


Name	~~Principal Occupation~~ Age			~~Director~~ ~~Since (1)~~	Position
General William Lyon	~~Chairman of the Board of Directors and~~ ~~Chief Executive Officer of the Company~~	91		~~1987~~

~~Wade H. Cable~~	~~President and Chief Operating Officer of~~ ~~the Company~~		~~1985~~

~~Richard E. Frankel~~	Chairman of the Board and ~~Chief~~ Executive ~~Officer of William Lyon Financial Services~~		~~2000~~

~~Harold H. Greene~~	~~Independent consultant~~		~~2005~~

~~Gary H. Hunt~~	~~Managing Partner of California Strategies, LLC~~		~~2005~~

~~Arthur B. Laffer~~	~~Chief Executive Officer of Laffer Associates~~		~~2005~~
		Chairman
William H. Lyon	~~Vice President and Chief Administrative Officer of the Company~~	40		~~2000~~

~~Alex Meruelo~~	~~Residential and commercial real estate developer and restaurant franchiser and operator~~		~~2004~~


	As of September 30, 2005
	Shares Beneficially Owned		Percentage of All Common Stock(1)
General William Lyon(2)	4,413,145	(3)(4)	50.71	%
The William Harwell Lyon 1987 Trust(5)	1,749,259	(6)	20.22	%
The William Harwell Lyon Separate Property Trust(5)	331,437		3.83	%
William H. Lyon(2)	0	(7)	0.00	%
Wade H. Cable(2)	297,708	(8)(9)	3.42	%
Richard E. Frankel(2)	0		0.00	%
Harold H. Greene(2)	0		0.00	%
Gary H. Hunt(2)	0		0.00	%
Arthur B. Laffer(2)	0		0.00	%
Alex Meruelo(2)	0		0.00	%
Douglas F. Bauer(2)	0		0.00	%
Thomas J. Mitchell(2)	0		0.00	%
Mary J. Connelly(2)	0		0.00	%
All directors and executive officers as a group (17 persons)	4,413,145	(7)(10)	50.71	%


~~Name~~Target Adjusted EBITDA	~~Age~~	~~Position~~Actual Adjusted EBITDA	Percent of Target
$60.1 million	$88.9 million	148%


Name	Target Shares of Performance-Based Restricted Stock(giving effect to the Common Stock Recapitalization)
William H. Lyon		42,781
Matthew R. Zaist		35,651
Colin Severn		8,913
Brian Doyle		21,391
Richard S. Robinson		7,131


¨		Fee computed on table below per Exchange Act Rules 14a-6(i)~~(4)~~(1) and 0-11.


		(1)		Title of each class of securities to which transaction applies:


¨		Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.



General William Lyon		William H. Lyon
Chairman of the Board and Executive Chairman		Director and Chief Executive Officer


	Page

INFORMATION CONCERNING VOTING AND SOLICITATION		1

General		1
Availability of Proxy Materials for the 2014 Annual Meeting		1
Who Can Vote, Outstanding Shares		1
Voting of Shares		1
Revocation of Proxy		2
Voting in Person		3
Quorum and Votes Required		3
Solicitation of Proxies		4
Stockholder List		4
Forward-Looking Statements		4

PROPOSAL 1 ELECTION OF DIRECTORS		5

Board Nominees		5
Board Recommendation		5
Information About Director Nominees		5
Board Recommendation		9
Executive Officers		9

CORPORATE GOVERNANCE		10

Corporate Governance Guidelines		10
Board Composition and Size		10
Board Leadership Structure		11
Director Independence		12
Board Meetings		13
Executive Sessions		13
Committees of the Board of Directors		13
Audit Committee		13
Compensation Committee		14
Nominating and Corporate Governance Committee		15
Corporate Finance Committee		15
Other Committees		16
Board Risk Oversight		16
Compensation Risk Assessment		16
Compensation Committee Interlocks and Insider Participation		16
Communications with the Board of Directors		17
Code of Business Conduct and Ethics		17

PROPOSAL 2 RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLICACCOUNTING FIRM		18

Board Recommendation		18
Change in Independent Registered Public Accounting Firm		18
Fees Incurred for Services by Principal Accountant		19
Pre-Approval Policies and Procedures		19
Audit Committee Report		19

SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL OWNERS		21

EXECUTIVE COMPENSATION		24

Compensation Discussion and Analysis		24
Summary Compensation Table		33
Grants of Plan-Based Awards		35
Outstanding Equity Awards at Fiscal Year-End		36


	Page
Options Exercised and Stock Vested		38
Pension Benefits		38
Nonqualified Deferred Compensation		38
Potential Payments Upon Termination or Change in Control		39
Director Compensation		40
Compensation Committee Report		42
Equity Compensation Plan Information		42

PROPOSAL 3 ADVISORY VOTE ON APPROVAL OF EXECUTIVE COMPENSATION (“SAY-ON-PAY VOTE”)		43

Background		43
Summary		43
Board Recommendation		43

PROPOSAL 4 ADVISORY VOTE ON THE FREQUENCY OF FUTURE SAY-ON-PAY VOTES		44

Background		44
Summary		44
Board Recommendation		44

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		45

Transactions with Related Persons		45

OTHER MATTERS		47

Section 16(a) Beneficial Ownership Reporting Compliance		47
Stockholder Proposals and Nominations		47
Householding of Proxy Materials		47
Incorporation by Reference		48


~~Name~~	~~Age~~		~~Position~~
~~General William Lyon~~	82		~~Chairman of the Board of Directors and Chief~~ ~~Executive Officer~~
~~Wade H. Cable~~	57		Director ~~President~~ and Chief ~~Operating~~Executive Officer
~~Richard E. Frankel~~Douglas K. Ammerman(a, b, c, d)	60	62		Director
~~Harold H. Greene (a, b, c)~~Michael Barr	66	43		Director
Gary H. ~~Hunt (a,~~Hunt(a, b, c)	56	65		Director
~~Arthur B. Laffer (b, c)~~Matthew R. Niemann(a, b, c, d)	65	49		Director
~~William H. Lyon~~Nathaniel Redleaf(c, d)	32	29		Director ~~Vice President and Chief Administrative Officer~~
~~Alex Meruelo (a,~~Lynn Carlson Schell(a, b, c)c, d)	43	53		Director


Type of Fees	2004		2003		2013			2012
Audit Fees	$	1,362,000	$	582,000	$	1,133,975	(1)	$	798,000
Audit-Related Fees		178,000		—
Audit Related Fees						—			—
Tax Fees		164,000		70,000		—			—
All Other Fees		—		—		—			—

Total Fees	$	1,704,000	$	652,000	$	1,133,975		$	798,000


		CLASS A COMMON STOCK(1)						CLASS B COMMON STOCK(1)						PERCENT OF TOTAL VOTING POWER(2)(3)
NAME	TITLE	Number			Percent of Class(2)			Number			Percent of Class			PERCENT OF TOTAL VOTING POWER(2)(3)
Named Executive Officers and Directors:

General William Lyon	Chairman of the Board, Executive Chairman		16,165	(4)		*			—			—			*

William H. Lyon	Director, Chief Executive Officer		115,378	(5)		*			5,721,434	(6)		100	%		50.7	%

Matthew R. Zaist	President & Chief Operating Officer		362,365	(7)		1.3	%		—			—			*

Colin T. Severn	Vice President & Chief Financial Officer		73,822	(8)		*			—			—			*

Brian W. Doyle	Senior Vice President & California Region President		170,814	(9)		*			—			—			*

Richard S. Robinson	Senior Vice President Finance and Acquisition		50,653	(10)		*			—			—			*

Douglas K. Ammerman	Director		23,988	(11)		*			—			—			*

Michael Barr	Director		—			—			—			—			—

Gary H. Hunt	Director		25,592	(12)		*			—			—			*

Matthew R. Niemann	Director		23,816	(13)		*			—			—			*

Nathaniel Redleaf	Director		—			—			—			—			—

Lynn Carlson Schell	Director		23,471	(14)		*			—			—			*

All directors and executive officers as a group (11 individuals)			692,210	(15)		2.5	%		5,721,434			100	%		51.6	%

5% Stockholders (not listed above):

Luxor Capital Group LP(16)			6,294,788			22.5	%		—			—			13.4	%

Paulson & Co. Inc.(17)			3,322,666			11.9	%		—			—			7.1	%

Goldman Sachs Asset Management(18)			1,397,449			5.0	%		—			—			3.0	%

Citadel Advisors LLC(19)			1,403,939			5.0	%		—			—			3.0	%


Name	FY 2012 Base Salary ($)		FY 2013 Base Salary ($)
General William Lyon		1,000,000		1,000,000
William H. Lyon		500,000		600,000
Matthew R. Zaist		350,000		500,000
Colin T. Severn		200,000		250,000
Brian W. Doyle		275,000		300,000
Richard S. Robinson		200,000		225,000


x		No fee required.


		(1)		Amount Previously Paid:


	Threshold			Target			Maximum
Percent of EBITDA Target Achieved		75	%		100	%		125	%
Bonus Payout (as a % of Target Bonus Opportunity		50	%		100	%		150	%


Name	2013 Cash Bonus ($)
General William Lyon	82	1,000,000		~~Chairman of the Board of Directors and Chief Executive Officer~~
~~Wade~~William H. ~~Cable~~Lyon	57	900,000		~~President and Chief Operating Officer~~
~~Douglas F. Bauer~~Matthew R. Zaist	44	750,000		~~Executive Vice President and Northern California Division President~~
~~Mary J. Connelly~~Colin T. Severn	54	262,500		~~Senior Vice President and Nevada Division President~~
Brian W. ~~Thomas Hickcox~~Doyle	52	450,000		~~Senior Vice President and Arizona Division President~~
~~Thomas J. Mitchell~~	45		~~Senior Vice President and Southern California Division President~~
~~Larry I. Smith~~	50		~~Senior Vice President and San Diego Division President~~
~~Michael D. Grubbs~~	47		~~Senior Vice President and Chief Financial Officer~~
Richard S. Robinson	58	225,000


Position		~~Senior Vice President — Finance~~Minimum Level of Stock Value Required to be Held
~~Cynthia E. Hardgrave~~Chief Executive Officer and Chief Operating Officer		584x Base Salary
Other NEOs		2x Base Salary


Name and Principal Position	Year		Salary ($)(1)			Bonus ($)			Stock Awards ($)(2)		Option Awards ($)(3)		Non-Equity Incentive Plan Compensation ($)(4)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)			Total ($)
General William Lyon		2013		1,000,000			1,000,000			—		—		—		—		27,902	(7)		2,027,902
Chairman of the Board and Executive Chairman		2012		1,000,000			500,000			—		—		—		—		—			1,500,000
Chairman of the Board and Executive Chairman		2011		1,000,000			—			—		—		—		—		—			1,000,000

William H. Lyon		2013		576,923	(5)		—			600,000		—		900,000		—		29,726	(7)		2,106,649
Director and Chief Executive Officer		2012		453,847			250,000			—		—		—		—		—			703,847
Director and Chief Executive Officer		2011		490,385			—			—		—		—		—		—			490,385

Matthew R. Zaist		2013		465,384	(5)		38,682	(6)		500,000		101		750,000		—		38,724	(7)		1,792,891
President and Chief Operating Officer		2012		350,000			437,500			1,260,000		1,192,966		—		—		—			3,240,466
President and Chief Operating Officer		2011		330,769			—			—		—		324,620		—		—			655,389

Colin T. Severn		2013		238,461	(5)		4,347	(6)		125,000		15		262,500		—		24,304	(7)		654,627
Vice President and Chief Financial Officer (Principal Financial Officer)		2012 2011		200,000 200,000			120,000 —			210,000 —		196,014 —		— 165,497		— —		— —			726,014 365,497

Brian W. Doyle		2013		294,231	(5)		11,954	(6)		300,000		42		450,000		—		26,798	(7)		1,083,025
Senior Vice President and California Region President		2012 2011		275,000 267,308			206,250 —			577,500 —		537,971 —		— 318,743		— —		11,767 —			1,608,488 586,051

Richard S. Robinson		2013		219,230	(5)		3,260	(6)		100,000		11		225,000		—		20,372	(7)		567,862
Senior Vice President Finance and Acquisition
Senior Vice President Finance and Acquisition


	Fair Value Performance-Based Stock Awards Assuming Maximum Performance ($)
General William Lyon		—
William H. Lyon	$	900,000
Matthew R. Zaist	$	750,000
Colin T. Severn	$	187,500
Brian W. Doyle	$	450,000
Richard S. Robinson	$	150,000


	Automobile Allowance		Gasoline Reimbursement on Personal Vehicle		Exec-U-Care Health Care Reimbursement Program		Tax Gross up of Prop. 30 Bonus Payment		Company 401(k) Matching Contributions
General William Lyon	$	4,800	$	0	$	23,102	$	0	$	0
William H. Lyon	$	4,800	$	1,063	$	16,213	$	0	$	7,650
Matthew R. Zaist	$	4,800	$	2,985	$	0	$	23,289	$	7,650
Colin T. Severn	$	4,800	$	3,831	$	7,706	$	2,518	$	5,449
Brian W. Doyle	$	4,800	$	6,751	$	400	$	7,197	$	7,650
Rick Robinson	$	4,800	$	2,640	$	3,394	$	1,888	$	7,650


			Estimated Possible Payouts Under Non- Equity Incentive Plan Awards(1)						Estimated Future Payouts Under Equity Incentive Plan Awards(2)						All other option awards: Number of securities underlying options (#)			Exercise or base price of option awards ($/Sh)			Grant date fair value of stock and option awards ($)
Name	Grant Date		Threshold		Target		Maximum		Threshold		Target		Maximum					Exercise or base price of option awards ($/Sh)			Grant date fair value of stock and option awards ($)
General William Lyon		—		—		—		—		—		—		—								—

William H. Lyon		—		300,000		600,000		900,000
		3/1/2013								21,391		42,781		64,172							$	600,000	(5)

Matthew R. Zaist		—		250,000		500,000		750,000
		3/1/2013								17,826		35,651		53,476							$	500,000	(5)
		11/5/2013														59,317	(3)		8.6625	(4)	$	101	(6)

Colin T. Severn		—		87,500		175,000		262,500
		3/1/2013								4,457		8,913		13,369							$	125,000	(5)
		11/5/2013														8,893	(3)		8.6625	(4)	$	15	(6)

Brian W. Doyle		—		150,000		300,000		450,000
		3/1/2013								10,696		21,391		32,086							$	300,000	(5)
		11/5/2013														24,454	(3)		8.6625	(4)	$	42	(6)

Richard S. Robinson		—		75,000		150,000		225,000
		3/1/2013								3,565		7,131		10,696							$	100,000	(5)
		11/5/2013														6,670	(3)		8.6625	(4)	$	11	(6)


	Option Awards								Stock Awards
Name	Number of securities underlying unexercised options exercisable (#)		Number of securities underlying unexercised options unexercisable (#)(1)		Option exercise price ($)		Option expiration date		Number of shares or units of stock that have not vested (#)(1)		Market value of shares or units of stock that have not vested ($)(2)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Rights That Have Not Vested (#)(1)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Rights That Have Not Vested ($)(2)
William H. Lyon		—		—		—		—		—		—		64,172		1,420,768

Matthew R. Zaist		49,434		9,883		8.66		9/30/2017		14,351		317,731		53,476		1,183,959
		141,425		28,272		8.66		9/30/2022		—		—		—		—

Colin T. Severn		7,411		1,482		8.66		9/30/2017		2,557		56,612		13,369		295,990
		23,636		4,726		8.66		9/30/2022		—		—		—		—

Brian W. Doyle		20,379		4,075		8.66		9/30/2017		7,033		155,711		32,086		710,384
		64,854		12,965		8.66		9/30/2022		—		—		—		—

Richard S. Robinson		5,558		1,112		8.66		9/30/2017		1,918		42,465		10,696		236,809
		17,678		3,535		8.66		9/30/2022		—		—		—		—


Name	Grant Date				Award Type	~~Vice President — Tax and Internal Audit~~
~~W. Douglass Harris~~	62		~~Vice President, Corporate Controller and Corporate Secretary~~Vesting Schedule
William H. Lyon	32	03/01/2013		~~Vice President~~	Performance-Based Restricted Stock	In February 2014, the Compensation Committee determined that 64,172 shares were earned. 21,391 shares vest on each of 3/1/2014 and ~~Chief Administrative Officer~~3/1/2015 and 21,390 shares vest 3/1/2016

Matthew R. Zaist		10/01/2012			Restricted Stock	14,351 shares vest on 12/31/2014

		03/01/2013			Performance-Based Restricted Stock	In February 2014, the Compensation Committee determined that 53,476 shares were earned. 17,826 shares vest on 3/1/2014 and 17,825 shares vest on each of 3/1/2015 and 3/1/2016
		10/01/2012			5-year Options	9,883 options vest on 12/31/2014
		10/01/2012			10-year Options	28,272 options vest on 12/31/2014

Colin T. Severn		10/01/2012			Restricted Stock	2,557 shares vest on 12/31/2014

		03/01/2013			Performance-Based Restricted Stock	In February 2014, the Compensation Committee determined that 13,369 shares were earned. 4,457 shares vest on 3/1/2014 and 4,456 shares vest on each of 3/1/2015 and 3/1/2016
		10/01/2012			5-year Options	1,482 options vest on 12/31/2014
		10/01/2012			10-year Options	4,726 options vest on 12/31/2014

Brian W. Doyle		10/01/2012			Restricted Stock	7,036 shares vest on 12/31/14

		03/01/2013			Performance-Based Restricted Stock	In February 2014, the Compensation Committee determined that 32,086 shares were earned. 10,696 shares vest on 03/01/2014 and 10,695 shares vest on each of 03/01/2015 and 03/01/2016
		10/01/2012			5-year Options	4,075 options vest on 12/31/2014
		10/01/2012			10-year Options	12,965 options vest on 12/31/2014

Richard S. Robinson		10/01/2012			Restricted Stock	1,918 shares vest on 12/31/2014

		03/01/2013			Performance-Based Restricted Stock	In February 2014, the Compensation Committee determined that 10,696 shares were earned. 3,566 shares vest on 3/1/2014 and 3,565 shares vest on each of 3/1/2015 and 3/1/2016
		10/01/2012			5-year Options	1,112 options vest on 12/31/2014
		10/01/2012			10-year Options	3,535 options vest on 12/31/2014


Name, Type of Termination	Cash Severance ($)(1)		Unpaid Bonuses ($)(2)		Equity Acceleration ($)(3)		Benefits Continuation ($)(4)		Total ($)
General William Lyon
Qualifying Termination (no CIC)		2,000,000		125,000		—		17,793		2,142,793
Qualifying Termination + CIC		2,000,000		125,000		—		17,793		2,142,793
Death or Disability		1,000,000		125,000		—		17,793		1,032,793

William H. Lyon
Qualifying Termination (no CIC)		1,500,000		62,500		947,171		25,717		2,535,388
Qualifying Termination + CIC		1,500,000		62,500		947,171		25,717		2,535,388
Death or Disability		600,000		62,500		—		25,717		688,217

Matthew R. Zaist
Qualifying Termination (no CIC)		1,500,000		109,375		2,015,924		17,793		3,643,092
Qualifying Termination + CIC		1,500,000		109,375		2,015,924		17,793		3,643,092
Death or Disability		—		109,375		—		—		109,375

Colin T. Severn
Qualifying Termination (no CIC)		425,000		30,000		—		12,858		467,858
Qualifying Termination + CIC		425,000		30,000		436,270		12,858		904,128
Death or Disability		—		30,000		—		—		30,000

Brian W. Doyle
Qualifying Termination (no CIC)		600,000		51,563		—		12,858		664,421
Qualifying Termination + CIC		600,000		51,563		1,185,752		12,858		1,850,173
Death or Disability		—		51,563		—		—		51,563

Richard S. Robinson
Qualifying Termination (no CIC)		375,000		25,000		—		4,270		404,270
Qualifying Termination + CIC		375,000		25,000		341,904		4,270		746,174
Death or Disability		—		25,000		—		—		25,000


Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)(1)(2)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)(1)		Total ($)
Douglas K. Ammerman		67,500		150,000		—		—		—		—		217,500
Michael Barr(3)		113,000		—		—		—		—		—		113,000
Gary H. Hunt		68,500		200,000		—		—		—		—		268,500
Matthew R. Niemann		61,500		150,000		—		—		—		—		211,500
Nathaniel Redleaf(4)		121,500		—		—		—		—		—		121,500
Lynn Carlson Schell		51,500		150,000		—		—		—		—		201,500


Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a)			Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights (b)			Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c)
Equity compensation plans approved by security holders		576,651	(1)	$	8.6625	(2)		2,390,366	(3)
Equity compensation plans not approved by security holders		—		$	—			—

Total		576,651		$	8.6625			2,390,366


M73569-P48183		KEEP THIS PORTION FOR YOUR RECORDS
		DETACH AND RETURN THIS PORTION ONLY


	Shares Acquired On Exercise(#)(1)	Value Realized($)(2)		Number of Securities Underlying Unexercised Options/SARS At Fiscal Year-End(#)(1)		Value of Unexercised In-The-Money Options/SARS At Fiscal Year-End($)(1)
	Shares Acquired On Exercise(#)(1)	Value Realized($)(2)		Exercisable	Unexercisable	Exercisable		Unexercisable
General William Lyon	—		—	—	—		—	—
Wade H. Cable	—		—	50,000	0	$	3,077,625	0
Douglas F. Bauer	—		—	0	0		0	0
Thomas J. Mitchell	—		—	0	0		0	0
Mary J. Connelly	8,000	$	602,500	8,665	0	$	533,352	0


Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	85,831	$	8.6875	396,666
Equity compensation plans not approved by security holders	N/A		N/A	N/A

Total	85,831	$	8.6875	396,666


Name and Position	Dollar Value ($) (Based on 2004)
General William Lyon, Chairman of the Board and Chief Executive Officer	$	10,176,870
Wade H. Cable, Director, President and Chief Operating Officer	$	10,176,870
Douglas F. Bauer, Executive Vice President and Northern California Division President	$	3,273,060
Thomas J. Mitchell, Senior Vice President and Southern California Division President	$	2,667,000
Mary J. Connelly, Senior Vice President and Nevada Division President	$	1,857,360
Current Executive Officers	$	30,529,860
Current Directors That Are Not Executive Officers	$	0
All Employees (including all current officers who are not executive officers)	$	0